Oracle financial f.pptx

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Farhan [email protected]: +923332233385http://pk.linkedin.com/in/hfarhanhttp://erpfarhan.blogspot.com 1

Application Consultant

mailto:[email protected]

mailto:[email protected]

http://pk.linkedin.com/in/hfarhan

http://erpfarhan.blogspot.com/

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ERP

Why Study ERP Systems?

2

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ERP

• ERP Affects Business Partner Requirements

• ERP Provides A Key Reengineering Tool

• ERP has Diffused Many Best Practices

• ERP Facilitated Adoption of Client Server Computing

• ERP Changed the Nature of the IS and Accounting Functions

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ERP

• ERP has Changed the Nature of Jobs in All Functional Areas

• ERP Systems Can Create Value

• ERP’s Integrate Firm Activities

• ERP’s Employ Best Practices

• ERP’s Enable Organizational Standardization

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ERP

• ERP’s Eliminate Information Asymmetries

• ERP’s Provide On-Line and Real Time Information

• ERP’s Facilitate Inter/Intra Organization Communication and Collaboration

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ERP SYSTEM AND TECHNOLOGY

• Client Server Computing

• Networks

• Relational Databases

• Software

• Reengineering

• Systems Analysis

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SOFTWARE LAYERS

ERP Applications

Database Management System

Operating System(s)

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ORDER MANAGEMENT SAMPLE PROCESS

Propose Commit Configure CheckCredit

Deliver Bill Collect

Sales & Distribution

ProductionPlanning

Financial

Accounting

MaterialsMgmt

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ERP Life Cycle

• Deciding to go ERP

• Choosing an ERP

• Designing an ERP

• Implementing ERP Systems

• Going Live

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ERP VENDORS

•Big five (BOPSE) … Baan, Oracle (Applications) PeopleSoft, SAP and, J.D. Edwards

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APPROACHES TO ERP SYSTEM

• There are two basic approaches that are used as bases of choosing ERP software

• Requirements Analysis (“As Is”)

• Best Practices Analysis (“To Be”)

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GAP ANALYSIS

•Match “AS IS” and “TO BE” to determine if any gaps.

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Dimensions ...

•There are two dimensions of change …

• Change in Software• Change in Organizational Processes

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Implementation Failure and Success Factors• The highest probability of a successful

implementation is when there is minimal change to both organization and software.• This does not mean all organizations should

pursue that approach.

• Change to organization processes can mean resistance to change, choice of the wrong best practices, etc.

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Implementation Failure and Success Factors

• Depends …which is best for your firm?

Highest Probabilityof Successful

Implementation

“Small r”

Potential Project Failure because of Process Changes

Potential Project Failure because of

Process Changes and IT Changes to Software

“BIG R” Potential Project

Failure because of ITChanges to Software

Extent of Change to Software

Minimal Extensive

Cha

nge

to O

rg.

Proc

esse

s Exte

nsiv

eM

inim

al

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MAPs• MAPs (Models, Artifacts and Processes)

• The quality of the MAPs will have a huge impact on the overall success of the ERP implementation.

• MAPs that are not efficient or effective for a particular firm can drag down the overall performance of that firm.

• Similarly, MAPs that meet the needs of a firm can push it to better performance, giving it a competitive edge.

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POST IMPLEMENTATION

• Why?

• New software and processes for users

• System ‘bugs’

• Technical issues…

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Post-Support from ERP Team

• Detecting and responding to system bugs

• Answering user questions

• Changing system parameters

• Responding to changing reporting needs

• Upgrading the software/hardware

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TRAINING

• The easiest mistake to make is underestimating the time and cost of training end users.”

• An implementation will be a failure if the software runs perfectly, but employees don’t know how to use it.

• Despite the importance associated with the need for ERP training, a recent survey found that in a Benchmarking Partners survey of 150 sites, 43% indicated that the amount of training was the biggest surprise encountered.

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Technical Risks andERP Life Cycle

• Deciding to go ERP• Firms that have kept up with technology are likely

to better understand the risks associated with ERP systems.

• Try to see what has worked in the past

Technical Business Organizational

DecidingChoosingDesigning

ImplementingGoing Live

Training

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• Choosing an ERP system• Virtually all software choice can be manipulated,

since it is a political process• Requirements change as new technology

becomes available.




Training

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• Designing• One company designed an ERP contract based on

computing capacity, so the vendor had to fix any problems with insufficient capacity




Training

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• Implementing and Going-Live• Upon implementation and going-live, capacity … six

transactions a minute … 360 per hour … or 3600 for a ten hour day … was not enough

• Needed more network capacity




Training

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• Training• Risk that mainframe IS personnel might have to be re-

tooled to client-server technology• ERP system may require different technical people with

different skills




Training

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BUSINESS RISKS

• Deciding whether or not to do ERP• Must have the resources to do the project

• Firms get going on ERP and then find that they don’t have the resources.

• This typically means that either the organization fails or the project fails.

• Must meet needs of the business• What is needed by the firm’s partners?




Training

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BUSINESS RISKS

• Choosing an ERP System• Determine specific requirements, e.g., transaction

handling capabilities• Fox Meyer - system could do 10,000 invoice lines, but

they needed 420,000• The business risk is that the ERP Vendor can not meet the

company’s needs




Training

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BUSINESS RISKS

• ERP Design• Design is a political process. As a result, there is a risk that the

design is sub-optimal.• There is also the risk that processes designed by one group in

the organization will not interface well with processes designed by other groups.

• There is the risk of project stopping• This project would have changed how people work and reduced

staffing by half. It was the easiest thing to cut because people did not have the stomach for it




Training

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BUSINESS RISKS

• Implementing• The project will take longer than expected• The project will cost more than expected




Training

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BUSINESS RISKS

• Going Live• If the ERP is not working properly, there could be

problems with customers and suppliers.• Hershey Foods Inc. lost most of their Halloween,

Thanksgiving and Christmas sales due to a poorly functioning ERP system




Training

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BUSINESS RISKS

• Training• Training should provide users with process and system

information• The main business risk is that timing is too short and too

late.




Training

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ORGANIZATIONAL RISKS

• Deciding whether or not to do ERP• Reportedly, one of the biggest risks is that top

management is not involved.• Another risk is that the domain areas are not involved and

committed




Training

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• Choosing an ERP System• Choosing the right consultant is the biggest challenge

(Risk)




Training

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• ERP Design and Implementation• Models of organizations are built into the software, as a

result, there are risks that the models do not match




Training

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• Going Live• Cultural issues that relate to “big R” reengineering create

organizational risk.• One firm went from compensation based on number

of units sold to salary to accommodate the ERP system




Training

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• Training• Employees not accustomed to data input will take on the

task.• If users don’t know how to use the system, it will fail.• There may be inadequately trained personnel after

implementation due to poor training or attrition.




Training

Oracle E-Business Suite Release 12

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EBS R12 available since Jan. 2007

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General LedgerThe Center of ERP

Purchasing

GeneralLedger

Cash Mgmt

Receivables

Inventory

Assets

Projects

Payables

Other

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Other

Release 12 – Evolutionary New ArchitectureCentralizing Key Architectural Components

Purchasing

GeneralLedger

Cash Mgmt

Receivables

Inventory

AssetsPayables

Projects

GeneralLedger

Centralized Accounting

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Intercompany

Global Tax


Banks & Accounts

Release 12 – Trading Community ArchitectureCentralization Extended

Projects

Other

Purchasing

Cash Mgmt

Receivables

Inventory

AssetsPayables

TradingCommunity

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Secondary Ledger

R12 Financial Organization

LE1 LE2 LE3

Inventory Purchasing Payables

EU Organization 1

ReceivablesInventory Purchasing Payables

US Organization 2

Ledger 1 Ledger 2 Ledger 3

Projects

Receivables

Inventory Purchasing Payable

sUS Organization 1

Ledger Sets

Role Based Access

Bank&

PaymentsInter

CompanyTax

Engine

Centralized Accounting Engine Dr Cr Dr Cr

LE & Org Setup

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SLA keeps the Subledgers & GL tied outKeep the auditors happy!

GLJournal Entries

and Balances

Transactions(& adjustments)

Subledger Applications

Accounting Events

Reconciled:Docs, SLA, GL in synch

AccountingConfigurations

Organization Setup

AccountingProgram

SubledgerJournal Entries

SubledgerBalances

Subledger AccountingService

GeneralLedger

DefaultDistributions

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Opening Balance Debit Credit

Closing Balance

SUBLEDGER ACCOUNTINGReceivablesCustomer One 250,000 150,000 400,000 - Customer Two 350,000 250,000 450,000 150,000 Customer Three 100,000 1,500,000 1,400,000 200,000 Customer Four 100,000 800,000 750,000 150,000 Customer Five 200,000 300,000 500,000 - Total 1,000,000 3,000,000 3,500,000 500,000

PayablesVendor I (250,000) 1,000,000 900,000 (150,000) Vendor I I (100,000) 75,000 50,000 (75,000) Vendor I I I (150,000) 725,000 775,000 (200,000) Vendor IX (250,000) 1,000,000 975,000 (225,000) Total (750,000) 2,800,000 2,700,000 (650,000)

Opening Balance Debit Credit

Closing Balance

GENERAL LEDGERCash 100 3,500,000 2,750,000 750,100 Receivables 1,000,000 3,000,000 3,500,000 500,000

Inventory 500,000 1,200,000 1,500,000 200,000 Assets 100,000 100,000 Prepayments 1,000 1,000 Payables (750,000) 2,800,000 2,700,000 (650,000) Accruals (250,000) 50,000 (300,000) Shares (100,000) (100,000) Previous Results (501,100) (501,100) Balance Sheet - 10,500,000 10,500,000 - Sales 3,000,000 (3,000,000) COGS 1,500,000 1,500,000 R&D 300,000 300,000 S&M 300,000 300,000 G&A-Fin 300,000 300,000 G&A-IT 150,000 150,000 G&A-HR 150,000 150,000 Period Income 300,000 300,000 Income Statement - 24,000,000 24,000,000 -

Ticked & Tied

General Ledger

SLA Detail

SLA Controls that GL Balances and SLA Balances tie,and that both tie to the document

(invoice, payment, etc.)sources

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Multiple Accounting RepresentationsGlobal Financial Reporting, Local and “GAAP”

Payables Invoice

BE RulesBE ChartBE CalendarEUR

Ledger B

CentralizedAccou

nting

Dr Cr

US GAAPUS COAUS CalendarEUR

Ledger A

Single business transaction can create multiple accounting representations, in multiple

currencies

http://www.maps-inc.org/eng/classes/images/american-flag.jpg

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Invoice Entered in Accounts Payable

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Multiple Ledgers Efficient Ledger Sets

Ledger Set Benefits:• Cross/Multiple Ledger processing and reporting• Data and definitions that can be shared and secured• Native support for multiple accounting representations

US GAAPUS COAUS CalendarUSD

Ledger C

BE RulesBE RekeningplanBE CalendarEUR

Ledger BUS GAAPUS COAUS CalendarEUR

Ledger A

US GAAPUS COAUS CalendarGBP

Ledger D

Defined by 4 C’s:Accounting ConventionChart of AccountsCalendarCurrency

Reporting Currency

Share:Chart of Accounts

CalendarLedger

Set

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Multiple Ledgers Efficient Ledger Sets

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Accounting Setup Manager R12 Single Page for Accounting Setup

** Setup which had comprised multiple steps across many forms is now consolidated into one dashboard **

Assign/view legal entities

Define ledger (set of books)

Define operating units

Define legal entities dashboard

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Release 12 – Bank Account ChangesCentralized Bank & Bank Account Definitions

Intercompany

TradingCommunity

Global Tax


Banks & Branches

Purchasing

Cash Mgmt

Receivables

Inventory

AssetsPayables

Projects

Banks & Accounts

Other

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• Bank account is now associated with LE entity rather than Operating Unit

• Single bank account serves multiple Operating Units

• Any and all Operating Units associated with a ledger can be permitted to use the bank accountAssets

ProjectsReceivables

PayablesPurchasing

Projects

Receivables

Payables

Inventory

PlusCentralized Credit Card Model

Credit Card EncryptionSupplier & Customer Banks in TCA

Centralized Banking and PaymentsFunds Disbursement and Capture

E-Business SuiteWork in Process

LE

OU A OU B OU C

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OU A

OU B

OU CBank

Single Payment

Instruction

Invoices

Payments

Example: Shared Service Disbursement

1. Setup accounting policies2. Select invoices from

multiple OUs3. Format for bank and

disbursement countries4. Send single instruction to

bank5. Generate separate

payments for each OU


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User ExperiencePayables’ Payments Dashboard

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CashManagement

ExternalSystems

Formats• BAI2• SWIFT940• EDIFACT• XML

Banks

Reconciliation Open Interface

Bank Statement Open Interface

GeneralLedger

AR

AP

Miscellaneous Transactions

Accounting Entries

Treasury

Payroll

Statements

$

$ $

Secure Treasury Operations & Information With Seamless and Timely Bank Reconciliation

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Meet Enterprise Cash Requirements With Flexible Cash Forecasting

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Intercompany

TradingCommunity

Global Tax


Banks & Accounts

Other

Purchasing

Cash Mgmt

Receivables

Inventory

AssetsPayables

Projects


Global Tax

• Centralized Rules & Determination

• Improved Reporting• Effective Dated Setup• Tax Simulator

Release 12 – Global TaxCentralized Tax Determination & Reporting

61 Copyright © Oracle Corporation, 2006. All rights reserved.

Tax Transactions

Taxes,Rules

DetermineRegimes

TaxableBasis

CalculateTax

AmountTax Status

& RateApplicable

Taxes

Single Interface for Transactions

Transparent Integration with Tax Partner Services

Parties

Places

Products

Processes

Payables

Receivables

Purchasing

Transactions

Sales Orders

… Tax Reports- PDF, HTML, RTF- Security enabled

Oracle eBusiness Tax Processing taxes for transactions and reporting


Global TaxRegime to Rate Configuration

Regime

Tax

Status

Rate


Global TaxRules & Exceptions

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Intercompany

TradingCommunity

Global Tax


Banks & Accounts

Release 12 – Trading Community ArchitectureCentralization Extended

Projects

Other

Purchasing

Cash Mgmt

Receivables

Inventory

AssetsPayables

TradingCommunity

• Suppliers• Banks & Branches• Tax Geographies• Improved Consistency

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Suppliers in TCALeveraging centralized data model

Trading Community Architecture

ERP CRM 3rd Party

PayablesPurchasi

ng

Global Tax

Payments

SuppliersGeographies Party

Information

Cash Manageme

ntBanks and

Branches

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Suppliers in TCA

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Release 12 – IntercompanyAdvanced Global Intercompany System

Intercompany

TradingCommunity

Global Tax


Banks & Accounts

Other

Purchasing

Cash Mgmt

Receivables

Inventory

AssetsPayables

Projects

Intercompany• Intercompany Account

Definition• Integration with Payables

& Receivables• Improved Reconciliation• Inter & Intra – Company

Balancing

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Manual Entry

Open Interfaces /

API

Excel(Web ADI)

Advanced GlobalIntercompany

SystemSubledgerInvoices &Documents

Generate subledger invoices Control transaction entry with

Intercompany Calendar Fully Configurable Approval

Rules Centrally defined Intercompany

Accounts Transaction-level balancing

Online Reconciliation Reporting

XML Publisher Reports

Subledger Accounting

Dr Cr

General Ledger Receivable

sPayable

s

Centralized Intercompany Faster Period-End Close

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This is the Receivables

Balance in Vision Sweden

This is the Payables

Balance in Vision Norway

Advanced Global Intercompany System (AGIS)

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Totals of the journals posted in each of the Legal Entities grouped

by source and category

The Payables balance in Vision Norway is less than the

Receivables balance in Vision Sweden indicating Payables

Invoices have not been posted.

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Details of the journals in Vision

Sweden

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MOAC

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Responsibility Responsibility Responsibility

Role-Based AccessMore Productive Shared Services Operations

ItalyLegal Entity

FranceLegal Entity

USLegal Entity

Perform multiple tasks across operating units without changing

responsibilities

Responsibility Responsibility ResponsibilitySingle Responsibility

Functional TasksAccounting Billing, Dunning & Collections

ProcurementOrder ManagementPaymentsData Management

ItalyOperating

Unit

FranceOperating

Unit

USOperating

Unit

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MOAC in Action

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BI Publisher

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Templates

BI PublisherOracle

Applications

CRM

Projects

FMS

HCM

SCM

Output FormatsData Sources

Any XMLData Source

PDFRTF

Business User

PublishingEngine

XML

• Email• Printer• Fax

HTMLXML

Letters

FundTransfers

OnlinePaychecks

OrderConfirmations

Bills GovernmentGrant Forms

Destination

EDIExcel

BI PublisherBusiness Users Format and Deliver Documents

ThinkWork Manage

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BI PublisherHigh Quality Enterprise Reporting

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