oracle financial f.pptx
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Farhan Ahmedhafizfarhan@gmail.comContact: +923332233385http://pk.linkedin.com/in/hfarhanhttp://erpfarhan.blogspot.com 1
Application Consultant
HAMDARD UNIVERSITY
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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Technical Risks andERP Life Cycle
• Choosing an ERP system• Virtually all software choice can be manipulated,
since it is a political process• Requirements change as new technology
becomes available.
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
Training
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Technical Risks andERP Life Cycle
• Designing• One company designed an ERP contract based on
computing capacity, so the vendor had to fix any problems with insufficient capacity
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
Training
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Technical Risks andERP Life Cycle
• 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
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
Training
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Technical Risks andERP Life Cycle
• 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
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
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?
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
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
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
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
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
Training
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BUSINESS RISKS
• Implementing• The project will take longer than expected• The project will cost more than expected
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
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
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
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.
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
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
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
Training
HAMDARD UNIVERSITY
ORGANIZATIONAL RISKS
• Choosing an ERP System• Choosing the right consultant is the biggest challenge
(Risk)
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
Training
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ORGANIZATIONAL RISKS
• ERP Design and Implementation• Models of organizations are built into the software, as a
result, there are risks that the models do not match
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
Training
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ORGANIZATIONAL RISKS
• 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
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
Training
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ORGANIZATIONAL RISKS
• 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.
Technical Business Organizational
DecidingChoosingDesigning
ImplementingGoing Live
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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Centralized Accounting
Intercompany
Global Tax
Centralized Accounting
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
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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
Centralized Accounting
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
Centralized Accounting
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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
Centralized Accounting
Banks & Accounts
Other
Purchasing
Cash Mgmt
Receivables
Inventory
AssetsPayables
Projects
Centralized Accounting
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
63 Copyright © Oracle Corporation, 2006. All rights reserved.
Global TaxRegime to Rate Configuration
Regime
Tax
Status
Rate
64 Copyright © Oracle Corporation, 2006. All rights reserved.
Global TaxRules & Exceptions
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Centralized Accounting
Intercompany
TradingCommunity
Global Tax
Centralized Accounting
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
HAMDARD UNIVERSITY
Release 12 – IntercompanyAdvanced Global Intercompany System
Intercompany
TradingCommunity
Global Tax
Centralized Accounting
Banks & Accounts
Other
Purchasing
Cash Mgmt
Receivables
Inventory
AssetsPayables
Projects
Intercompany• Intercompany Account
Definition• Integration with Payables
& Receivables• Improved Reconciliation• Inter & Intra – Company
Balancing
HAMDARD UNIVERSITY
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
HAMDARD UNIVERSITY
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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