celantra systemsnorcaloaug.com/seminar_archive/2014_training_day_pres/5_1_kolbe.pdfhis extensive...

Celantra Systems:

Prepared by Hans Kolbe

Partner, Celantra Systems

COPYRIGHT CELANTRA SYSTEMS 1

■ Introduction

About the Presenters

Company Information

■ The Business Case – Why Op Unit simplification?

■ How the LE is represented? History walk through V 9 –

Fusion Apps

■ Multi-Org Models available in R12

■ Opportunities, Questions & Solutions

■ Customer Implementation Report: Facebook


Global Implementations and Process

Alignment: Plan, Design, and Execute

Celantra Systems provides innovative solutions

to today’s most vexing issues in multi-national

ERP configurations.

Celantra Compliance Rule Engine (CCRE) and Compliance Sequencing Utility

Celantra has released a number of automated compliance tools, based on the Celantra

Compliance Rule Engine (CCRE)

Celantra Sequencing Utilities supports Oracle clients with international operations. We

ensure gapless date sequenced numbering for VAT and statutory journal reporting.

Automated audit trails and reporting are provided.

Visit Celantra Systems Exhibit Table: Location 21

[email protected]

www.celantrasystems.com


mailto:[email protected]

http://www.celantrasystems.com/

About the Presenter: Hans Kolbe Hans Kolbe has managed and advised global

software implementation projects for over 15 years. His extensive knowledge on Oracle applications is combined with a formal background as a German attorney, trained in international and comparative law.

Chair of Multi-National SIG Group

Specialist in Intercompany and multi-org configurations, international compliance and transaction tax

[email protected]

www.celantrasystems.com

415-730-1131

Visit the Celantra Systems Exhibit at Table 21

4


mailto:[email protected]

Standard (“Silo”) ERP Multi-Org Model All Subsidiaries are Parallel Entities, 1 Ledger, 1 LE, 1 Op Unit

Consolidated Ledger

Central

L1410

Ger

1462

OU OU

Inventory

Fra

1475

U.K

1473

Ita

1463

Swe

1444

Den

1432

Hol

146

1

Bel

144

2

Swi

146

5

Aus

141

5

Spa

1467

LE LE

Pol

14xx

OU

Per Operating Unit : One Validation Org for VAT rates , One Planning Org , Global Master.

LE


Traditional Silo Model 1 Ledger-1 Legal Entity-1 Operating Unit

Secondary Ledger Primary

Ledger


Ledger


Ledger


Ledger


Ledger

LE

OU

LE

OU

LE

OU

LE

OU

LE

OU


Secondary Ledger

Secondary Ledger


Ledger

LE

OU

LE

OU

LE

OU

LE

OU

LE

OU

Advanced Silo Model 1 Ledger-n Legal Entities-n Operating Units


New Cross Legal Entity Operating Unit (CLEO) 1 Ledger-n Legal Entities-1 Operating Unit

Secondary

Ledger Secondary

Ledger Secondary

Ledger Primary Ledger

LE

LE

LE

OU

LE

LE


New OU Model - Business Objectives Reduce the time (from months to days) that it takes to add a new

legal entity (LE) into Oracle This could be for either an acquisition or an existing LE that is not

yet on Oracle

Ensure that any changes to business operations resulting from this new approach do not negatively impact: Qualcomm accounting operations

ERP support by FSG & IT

Month-end close processes are not negatively impacted

Design this new solution around a typical international implementation scope – GL, FA, PO, AP and Projects Assumption is that orgs requiring either manufacturing,

component inventory or order management must have separate LE


Multi-LE OU – Pros & Cons Pros

Adding a legal entity into Corp Oracle (e.g. from acquisition) could be radically faster than current approach (creating a separate OU)

Single Operating Unit with multiple legal entities should improve operational efficiency

Fewer OU’s to close at month-end will help to speed the close, assuming no additional tasks are required

Multi-LE support aligns with Oracle’s stated direction for Operating Unit concept & Fusion Apps

Cons

Impact on business operations resulting from configuration differences is not known

Impact on support functions (IT & FSG) not known

Not intended to support manufacturing-related activities

If a legal entity grows too large, it could entail configuring a separate OU at a later date


Legal Entity Representation from Release 9 to 12

Release 9 - multiple installs GL: Set of Books or Balancing Segment Value Sub-ledgers: multiple installations of Oracle Applications

Release 10 – Operating Unit GL: Set of Books and/or Balancing Segment Value Subledgers : Operating Unit

Release 11 – Operating Unit and Legal entity (limited) GL: Set of Books and/or Balancing Segment Value Subledgers : Operating Unit Legal entity (very limited functionality) Op Unit fixed in Hierarchy below LE

Release 12 – Legal entity GL: Set of Books and/or Balancing Segment Value Sub-ledgers: Legal entity (financials)

Fusion Apps – Legal Entity and Business Unit GL: Ledgers, BSV, BU, secondary balancing segment Sub-Ledger: LE (including operational)… Operating Unit is gone


Legal Entity and Operating Unit

An Operating Unit is not directly connected to a Legal entity

Default Legal Context is used to assign one of the Legal Entities within a Ledger


Legal Entity and Accounting Ledger representing a Legal Entity

BSV (Balancing Segment Value) representing a Legal Entity


Traditional Silo Model 1 Ledger-1 Legal Entity-1 Operating Unit


Ledger


Ledger


Ledger


Ledger


Ledger

LE

OU

LE

OU

LE

OU

LE

OU

LE

OU


Secondary Ledger

Secondary Ledger


Ledger

LE

OU

LE

OU

LE

OU

LE

OU

LE

OU

Advanced Silo Model 1 Ledger-n Legal Entities-n Operating Units


New Cross Legal Entity Operating Unit (CLEO) 1 Ledger-n Legal Entities-1 Operating Unit

Secondary

Ledger Secondary

Ledger Secondary

Ledger Primary Ledger

LE

LE

LE

OU

LE

LE


Opportunities using the Legal entity independently from the Operating Unit

Model the legal structure independently of operational structure and accounting structure; Align Operating Unit with operating structure

Reduce Month-End Activities and Reconciliations

Reduce time to integrate acquisitions and roll-out new modules and functionality

Dramatically reduce time to integrate acquisitions and roll-out new modules and functionality

Ensure global processes by reducing number of configurations and synchronizations challenges

Improve global data quality - reduce duplication

Ensure global processes by reducing number of configurations and synchronizations challenges


Questions to the CLEO proposal Does this design fit my operating structure?

Shared and local service services Security, defaults, and validations

How can I connect each transaction to a single LE? Payments, Invoices Reconciliation

How can I fullfill my local statutory and tax reporting requirement? Sequencing, tax, accounting Local COA and GAAP rules

What about Intercompany Transactions? How does this impact corporate consolidations? How do you deal with multiple functional currencies?


Answers from the CLEO solution Does this design fit my operating structure?

Align Multi-Org to Op. Unit / multiple Options

Transaction Ownership?

LE column in Finance Modules

Nominate Data Element in all others (Company Segment)

Local statutory and tax reporting?

Stat Reporting + GL sequencing in secondary ledger

VAT through EBus Tax and

Trx Sequencing thru sub-ledger configuration

What about intercompany Transactions?

Identify source, LE owner and LE partner

How does this impact corporate consolidations?

Generally no impact. Secondary ledger available, if needed.

Multiple functional currencies?

Secondary / Reporting ledger can be used.


Legal Entity and Sub-ledger Transactions

Payables Transactions use the Customer Taxpayer id to select the Legal entity Default legal Entity can be defined on supplier site Setup

Receivables Transactions use the Legal entity column

Defaults can be assigned on the Transaction Type and Batch

EB-Tax uses the Configuration Owner as Legal Entity Legal entity can be assigned to a Tax Regime Rules and Setups can be defined by Configuration Owner (=LE)

Oracle Payments uses Bank account owner to identify the Legal entity


Challenges using the Legal entity Implementation of Localizations

Not all localizations are supporting the Legal Entity

Sequencing: Document, Accounting and Reporting Sequences

Sequencing Utility available

Inventory and Projects Intercompany Invoicing

Operating Unit is required to initiate Intercompany Invoicing in Inventory and Projects

GL based IC journals

“Journal Sweep” Utility to identify required IC transactions and generate input into AGIS Interface (FUN tables).


Mrunal Potdar


Current State One Legal Entity (Multiple BSVs) One Ledger Multiple OUs (owns multiple Inventory Orgs) Common Asset book (Corporate and Tax Books) Proposed State One Legal Entity per BSV requiring sub-ledger

support (more than One Legal entity) One Ledger Common OU (Own all US Inv orgs) Common Asset book (Corporate and Tax Books)

Project Goals Consolidate US OUs to one OU and design scalable

Source to Pay business process for operational efficiency gains

Define Legal Entities using standard functionality and assign BSVs (company codes)

Reduce PO cancellations significantly Improvise US Payments accuracy and turn around

time Accounting accuracy Reduce Period close overhead (multi OU to single

US OU)

OU Consolidation Impact Eliminates need for supplier setup in multiple operating units Eliminates need to run key processes like invoice validation, create accounting, transfer to GL in multiple OUs Improvise PO change process and eliminates need for PO cancellation Allows transfers between inventory orgs within US OU for all US data centers Speeds up close process (avoids review and sweeping of unaccounted transactions in multiple US OUs) Improves IT's velocity / ability to roll out new entities from current time line of 4-6 weeks to few days to one

week Simplify Invoice to Pay process leading to productivity gains overall Outsourcing effort Supplier site cleanup including obsoleting redundant sites and merge duplicates


Key Challenges Delinking of BSV from existing Legal Entity and assigning it to new Legal Entities Ensuring seamless transition to users for accounting impact Non PO Invoices processing and accounting (Expense Accruals) Payment processing transition - ‘transition towards standard functionality of using bank account owning legal

entity to achieve segregation of payments’ Sub-ledger reporting as existing OUs are consolidated in common OU. Correlating POs / Invoices / Payments to

BSVs in post OU consolidation requires reporting changes EB Tax / Vertex changes to support Common OU

OU Consolidation Impact Eliminates need for supplier setup in multiple operating units Eliminates need to run key processes like invoice validation, create accounting, transfer to GL in multiple OUs Improvise PO change process and eliminates need for PO cancellation Allows transfers between inventory orgs within US OU for all US data centers Speeds up close process (avoids review and sweeping of unaccounted transactions in multiple US OUs) Improves IT's velocity / ability to roll out new entities from current time line of 4-6 weeks to few days to one

week Simplify Invoice to Pay process leading to productivity gains overall Outsourcing effort Supplier site cleanup including obsoleting redundant sites and merge duplicates


Please contact us (415) 730-1131

[email protected]


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