Oracle Financials Accounting Hub in the Banking Industry

Agenda

! Introduction ! Case Study - Overview ! Integration Challenges in a non FAH world ! FAH Solution Offerings ! FAH Process Overview ! Implementation Approach ! Lessons Learnt ! Application Snapshot ! Q&A

Global Oracle Practice

! Fujitsu / Oracle 20+ Year Relationship ! End-to-End Solutions

!  Strategic Assessments, !  Implementations &Upgrades !  Hosting !  Managed Services / Support

! Center of Excellence !  Thought Leadership !  Proof of Concept Environment !  ROI Discovery Sessions

Oracle Global Strategic Partner

Case Study - Overview

! One of the largest Japanese Bank ! Current Oracle footprint

!  Oracle EBS 11.5.10 !  Oracle GL, AP, FA

! Many legacy systems interfacing directly to GL ! Reporting Data extracted from various sources ! The Big Question –

!  R12 upgrade with or without FAH? !  How to handle multiple GAAP reporting?

! Proof of Concept Engagement !  Three Legacy System

Case Study - Overview

! POC - Objectives !  Multi-GAAP Accounting !  Drill Down from GL to Sub-Ledger Journals and Supporting Reference Data !  Supporting Reference with Balances !  User Transaction Identifiers !  Draft Accounting !  Foreign Currency Transaction Accounting !  User Transaction Identifier Addition !  Accounting Rule change and its Impact !  Event Modeling v/s Pass through Journal Entries !  Other FAH capabilities like Import Export and Copy application definitions

Integration Challenges (Non FAH World)

Black Box (Rules,

Mappings, Acct Derivations etc.)

Source System 1

Source System 2

Source System 3

Source System 4

Source System n

Oracle General Ledger

! Entire Intelligence of generating the Accounting entries is hidden

! The Flow is One-Directional ! Complete Audit trail is not possible ! System is not Flexible ! No Standardization ! System is not Scalable ! Reusability is very Limited ! Reconciliation Issues !  Lack of confidence in the Financial

Figures ! High Cost of Maintenance

Reclassification of Journal Entries after Journals are created in GL

Not Capable for Multi GAAP Accounting

New System Integration

! Big IT Project ! Testing Cycles are huge !  Integration is time consuming !  Increased Manual Intervention ! Addition to the Black Box !  Intelligence still hidden !  Increased Lack of confidence in the

financial figures

FAH Solution Offerings

! Single Source of Accounting Truth

Financial Accounting Hub

Loans System

Deposits

Payments

General Ledger

Analytics

Reporting

Centralized Accounting Rules Centralized Accounting Repository

Maintains configurable, detailed Information Contextual transaction information for reconciliation

Quickly update Accounting Rules

Multiple GAAP representation Drill down from GL to FAH to Source System Configurable Supporting Reference Balances Intuitive User Interface for Business Analyst

Inbuilt Validations, Error Handling, Version Control

Financial Accounting

FAH Solution Offerings

! Multiple Accounting Representation

Primary Ledger (US GAAP)

Secondary Ledger (IFRS)

US GAAP Subledger Accounting Method

IFRS Subledger Accounting Method

US GAAP Application Accounting Definition

IFRS Application Accounting Definition

Accounting Event

FAH – What’s not in it

! Data Extraction ! Event Creation ! Calculation Engine for Source System calculations ! Inbuilt Intelligence for IFRS Accounting or any GAAP Accounting

Financial Accounting Hub Process Overview

Accounting Method Builder

Application

Event Entities System Transaction Identifiers

Event Classes

Event Types

Sources Transaction Objects

Journal Line Definition Header Assignments

Journal Line Types

Account Derivation Rules

User Transaction Identifiers

Line Description Supporting References

Header Description & Supporting References

Accounting Method Builder (Building Accounting Rules)

Financial Accounting Hub Uptake Process

Event Model

Sub Ledger Application

Entity Code 1

Event Class 1

Event Type 1

Event Type 2

Event Class 2

Entity Code 2

Event Model

Event Model: Event Types

Entity Code 1

Event Class 1

Event Type 1

Event Type 2

Event Class 2

Entity Code 2

Event Model

Event Model: Event Types

! Lowest level of the Event Model ! Represent the business operation that can be performed on a

transaction/document ! Event Types determine which Accounting Rules should be used ! Journal Information (lines, accounts, descriptions, supporting

references) are associated with event types ! Provides the accurate name and description of the business event

which gave rise to the subledger journal entry

Event Model: Event Classes

Entity Code 1

Event Class 1

Event Type 1

Event Type 2

Event Class 2

Entity Code 2

Event Model

Event Model: Event Classes

! Groups accounting event types into user oriented transaction categories. (Invoice creation, Invoice Approval, Invoice Cancellation are grouped in a class called Invoices)

! Accounting definitions usually differs by Event Classes ! Transaction Objects, Sources, default assignments of accounting

attributes are made at the Event Class level. ! GL Journal Categories are tied with Event Classes

Event Model: Event Entities

Entity Code 1

Event Class 1

Event Type 1

Event Type 2

Event Class 2

Entity Code 2

Event Model

Event Model: Event Entities

! Highest level grouping of similar transactions ! Groups event classes into technical transaction model ! All underlying transactions share the same identifier (System

Transaction Identifier) ! All underlying transactions share the same data structure ! Often logically corresponds to a single document used as a basis

for several related transactions

Event Model: Subledger Application

Entity Code 1

Event Class 1

Event Type 1

Event Type 2

Event Class 2

Entity Code 2

Event Model

Event Model: Subledger Application

! Partitioning of Subledger Data ! GL Journal Source is aligned at this level ! Generally this level aligns with a third party source system ! Multiple source systems can link to the same subledger application ! Application Accounting Definitions cannot be shared across

applications

Event Model: Example

Payables

Invoices

Standard Invoice

Invoice Validation

Invoice Cancellation

Invoice Adjustment

Prepayment Invoice

Credit Memo

Payments

Event Model

Custom Build Accounting

Transformation Engine

Implementation Road Map

Source System 1

Source System 2

Source System 3

Source System 4

Source System n

Oracle Financial

Accounting Hub

Future Architecture

Source System 1

Source System 2

Source System 3

Source System 4

Source System n

Current Architecture

Implementation Approach

Incremental Implementation Approach

Source System 1

Source System 2

Source System 3

Source System 4

Source System n

Current Architecture

(Light Mode)

Source System 1

Source System 2

Source System 3

Source System 4

Source System n

FAH Pass

Through events

Incremental Approach

! Introduce FAH Pass-Through System !  Events are processed in the custom engine

!  Mapping between legacy Accounts and new Accounts now handled by FAH

!  Multi GAAP Accounting Possible

!  Validations managed by FAH !  No Accounting Rules in FAH

pass-through system yet. !  Accounting repository starts

to get maintained !  Additional information can be

introduced in FAH at this stage by UTI and supporting references

!  FAH framework is introduced in the architecture

(Light Mode)

Source System 1

Source System 2

Source System 3

Source System 4

Source System n

FAH Pass

Through events

! Move one system to Event Based Accounting FAH Model

!  Move the accounting rules from the custom engine to FAH

!  Leverage the full capabilities of the FAH transaction model

!  User Transaction Identifiers and Supporting references are fully configured

!  Maintain Audit trail and full drilldown functionality

Event Based

Custom Engine

(Light Mode)

Source System 1

Source System 2

Source System 3

Source System 4

Source System n

FAH Pass

Through events

! Continue moving one system at a time to the Event based Accounting FAH model

!  Move the accounting rules from the custom engine to FAH

!  Leverage the full capabilities of the FAH transaction model

!  User Transaction Identifiers and Supporting references are fully configured

!  Maintain Audit trail and full drilldown functionality

Event Based

Source System 1

Source System 2

Source System 3

Source System 4

Source System n

Oracle Financial

Accounting Hub

Future Architecture

! All legacy systems directly integrated using Event based Accounting FAH model

!  Entire custom accounting engine can be decommissioned

!  Low Risk approach !  Lessons learnt from one phase can be

effectively applied to future phases thereby creating a highly efficient Financial Accounting Hub

Implementation Considerations

! Big Bang or Incremental Implementation Approach ! How many Applications should you define ! Event Model & Transaction Objects Model ! Event Creation Mechanism (Pull or Push) ! Legacy Application Interface Strategy ! Supporting References with Balances ! Data Volume and Performance ! Security Model

Lessons Learnt

! Spend sufficient time for Event Modeling and Data Modeling (Transaction Object Analysis and Build)

! Document entire Transaction life cycle and each event therein ! Avoid Using Custom Sources ! Give Unique names to Source Columns across transactions ! Move mapping rules logic from custom code to FAH ! Consider Inquiry and Reporting requirements during Design phase ! Start small during design and build, but perform load testing with

full volume before Go-Live ! Keep it simple, yet keep it Agile for future requirements

Application Snapshot

Anil Patil anil.patil@us.fujitsu.com

Oracle Financials Accounting Hub in the Banking Industry

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