R12 Financials Why Upgrade - Oracleopnpublic/... · • Inter & Intra – Company Balancing. Release 12 – Centralized Architecture ... • Transition to R12 new features incrementally

Business Case for Upgrading toE-Business Suite Financials Release 12

The following is intended to outline our generalproduct direction. It is intended for informationpurposes only, and may not be incorporated into anycontract. It is not a commitment to deliver anymaterial, code, or functionality, and should not berelied upon in making purchasing decisions.The development, release, and timing of anyfeatures or functionality described for Oracle’sproducts remains at the sole discretion of Oracle.

Agenda

• Introduction & Overview

• Upgrade Paths

• Business Goals• Standardization

• Centralization

• Simplification

• R12 Upgrade Impact• Process Improvements

• Detailed impact in key feature areas

• So, Why Should you Upgrade to Release 12?

Business Case for UpgradingUnderstanding the Options

11i

11.5.10

12

Fusion

Complexity AboundsBarrier to Finance Effectiveness

Source: The Agile CFO, IBM Business Consulting Services

Data warehouses

ERP instances

Planning/forecasting tools

Finance common platforms

Functional best practices

Process simplification

Common processes

Standard policies and rules

Standard chart of accounts

17%17%

24%24%

27%27%

27%27%

12%12%14%14%

35%35%

38%38%

56%56%

0 20 40 60

Pro

cess

Tech

no

log

y

Fewer than 50% of

companies haveachieved their processand technologyimprovement goals

Percent of Companies Implementing Process and Technology Improvements

Key Decision-DriversGeneric Reasons to Upgrade

Think, Manage & Work:Think, Manage & Work:GloballyGlobally

Fusion MiddlewareFusion Middleware

300+ New Features300+ New Features

Applications UnlimitedApplications Unlimited

Fusion BaselineFusion Baseline

New Financials ArchitectureNew Financials Architecture

Te

ch

no

log

yT

ec

hn

olo

gy

Fu

nc

tion

ality

Fu

nc

tion

ality

Ris

kM

itiga

tion

Ris

kM

itiga

tion

UpgradeUpgrade

Co

st

Sa

vin

gs

Co

st

Sa

vin

gs

Business Goals

CentralizeCentralize

StandardizeStandardize

SimplifySimplify

Business Processes& Information

Business Functions

Business Systems& Maintenance


Business Functions


Key Driver: Standardization

50%50% Senior executives say simplificationSenior executives say simplification

is driving theis driving the finance agendafinance agenda

Source: PWC Management Barometer

Reducing reliance on spreadsheets33%33%

Optimizing the finance organization and itsreporting structure

52%52%

Adopting best practices58%58%

Standardizing and integrating finance systems59%59%

Standardizing policies and business rules66%66%

Standardizing operating practices and controls69%69%

Identified as a Major Focus AreaIdentified as a Major Focus Area

StandardizationIdentifying the benefits

•• Consistency & UnderstandingConsistency & Understanding

•• Broader View of Financial DataBroader View of Financial DataInformationInformation

•• ComplianceCompliance

•• Improved CommunicationImproved CommunicationBusiness Policies & RulesBusiness Policies & Rules

•• Improved EfficiencyImproved Efficiency

•• Lowered costsLowered costs

•• ConsistencyConsistency

Best PracticesBest Practices

Business Goals



SimplifySimplify


Business Functions



Business Functions


CentralizationIdentifying the benefits

•• Improved ConsistencyImproved Consistency

•• Less DuplicationLess DuplicationDataData

•• Focused UsersFocused Users

•• Improved EfficiencyImproved Efficiency

•• Cost ReductionCost Reduction

FunctionsFunctions

Responsibility Responsibility Responsibility

Role-Based AccessMore Productive Shared Services Operations

Holland

Legal Entity

Denmark

Legal Entity

Belgium

Legal Entity

Perform multiple tasks across operating unitswithout changing responsibilities

ResponsibilityResponsibility ResponsibilityResponsibility ResponsibilityResponsibilitySingle Responsibility

Functional TasksAccounting

Billing, Dunning& Collections

Procurement

Order Management

Payments

Data Management

Holland

Operating Unit

Denmark

Operating Unit

Belgium

Operating Unit

General LedgerThe Center of ERP

Purchasing

GeneralLedgerGeneralLedger

Cash Mgmt

Receivables

Inventory

Assets

Projects

Payables

Other

Other

Release 12 – Evolutionary New ArchitectureCentralizing Key Architectural Components

Purchasing

GeneralLedger

Cash Mgmt

Receivables

Inventory

AssetsPayables

Projects

GeneralLedgerGeneralLedger

CentralizedAccountingCentralizedAccounting

Release 12 – Evolutionary New ArchitectureCentralized Accounting

Purchasing

GeneralLedger

Cash Mgmt

Receivables

Inventory

AssetsPayables

ProjectsGeneralLedgerGeneralLedger


Other

• Centralized Rules &Policies

• Centralized AccountingDefinitions

• Multiple Representations

• Single Source ofAccounting

• Improved Reconciliation

• Improved Reporting

• Drilldown Enabled

Release 12 – Bank Account ChangesCentralized Bank & Bank Account Definitions

Intercompany

TradingCommunity

GlobalTax


Banks &Branches

Purchasing

Cash Mgmt

Receivables

Inventory

AssetsPayables

Projects

Banks &AccountsBanks &Accounts

Other

• Internal & Customer &Supplier Banks

• Single Account forMultiple Operating Units


• Centralized Credit CardData Model & Encryption

Intercompany

TradingCommunity

GlobalTax

CentralizedAccounting


Other

Purchasing

Cash Mgmt

Receivables

Inventory

AssetsPayables

Projects


GlobalTax

GlobalTax

• Centralized Rules &Determination

• Improved Reporting

• Effective Dated Setup

• Tax Simulator

Release 12 – Global TaxCentralized Tax Determination & Reporting


Intercompany

TradingCommunity

GlobalTax

GlobalTax



Release 12 – Trading Community ArchitectureCentralization Extended

Projects

Other

Purchasing

Cash Mgmt

Receivables

Inventory

AssetsPayables

TradingCommunity

TradingCommunity

• Suppliers

• Banks & Branches

• Tax Geographies

• Improved Consistency

Release 12 – IntercompanyAdvanced Global Intercompany System

Intercompany

TradingCommunity

TradingCommunity

GlobalTax

GlobalTax



Other

Purchasing

Cash Mgmt

Receivables

Inventory

AssetsPayables

Projects

IntercompanyIntercompany• Intercompany Account

Definition

• Integration with Payables& Receivables


• Inter & Intra – CompanyBalancing

Release 12 – Centralized ArchitectureSolving Problems Now and in the Future

Intercompany

TradingCommunity

GlobalTax


Banks &Accounts

Cen

trali

zed

Arc

hit

ectu

reC

en

trali

zed

Arc

hit

ectu

re

Purchasing

Cash Mgmt

Receivables

Inventory

AssetsPayables

Projects

Other

• Improved Data Integrity

• Simplified & ConsistentUser Interface

• Shared Service CenterEnabling

• Groundwork for Fusion &Service-OrientedArchitecture

Business Goals



SimplifySimplify


Business Functions



Business Functions


SimplificationIdentifying the Benefits

• Consistency

• No RedundanciesCommon Understanding

• Simplified Processes

• Fewer Corner Cases

• Improved Efficiency

Cost Reduction

Accounting Setup ManagerSingle Page for Accounting Setup

•Legal Entities

•Ledgers

•Currencies

•BalancingSegments

•SubledgerAccounting

•OperatingUnits

•BalancingOptions

XML PublisherMaking Reporting Manageable

Separate data / layout / UI translation

Reportoutput

Flexibility

Reduced maintenance

Data Logic

Layout

Translation

XML Publisher

Financial Reporting with XML PublisherNearly 400 Configurable Formats

23Tax25Internal ControlsManager

17SubledgerAccounting

92Globalizations

10Receivables14General Ledger

6Public Sector21FinancialsConsolidation Hub

120Payments10Common Modules

9Payables15Collections

6Loans3Cash

2IT Audit22Assets

FormatsProductFormatsProduct

<Insert Picture Here>

Upgrade Impact

Upgrade Impact

• R12 Upgrade Details• Process improvements

• Upgrade details

• How you can be successful

Thursday 10/26: Technical Perspective on the EBS R12Financials Upgrade

Upgrade Impact

• Works like 11i until you decide to use the new features• Technical Upgrade

• Transition to R12 new features incrementally and at your own pace

• Before and After: How we get you from 11i to 12?• Data Management with TCA

• Legal Entities and where they are used

• Tax and how you can use eBTax rules

• Ledger

• Multiple Organizations

• Subledger Accounting and how you can use SLA

Data Management with TCALeveraging centralized data model

Oracle Fusion MiddlewareOracle Fusion Middleware

TradingCommunityArchitecture

TradingCommunityArchitecture

ERPERP CRMCRM 3rd Party3rd Party

PayablesPayablesPayablesPurchasingPurchasingPurchasing

Global TaxGlobal Tax PaymentsPayments

Suppliers

Geographies PartyInformation

CashCashManagementManagement

Banks andBranches

• Suppliers defined in AP

• Supplier sites often replicated inmultiple Ous

• Could only pay a supplier

• Banks defined in AP/AR/CE,Payroll and Treasury

• Bank accounts often replicated inmultiple Ous

• No geography model

Before R12Before R12 R12R12

TCA in R12Centralized Storage and Maintenance

• Supplier becomes TCA Party

• TCA Party Site for each distinctaddress. No more replication.

• Oracle Payments can makepayments to any payee

• Bank and Branch become TCAParties

• Bank Account in CE, owned by aLegal Entity. OUs granted usagerights. No more replication.

• TCA Geography Model

Legal Entity

• A Legal Entity is an entity identified through a registrationwith a Legal authority

• Legal Entities have the right to• Own property (assets, inventory, receivable, other LEs)

• Trade (borrow, sell, buy, incur expenses, employ)

• And the responsibility to• Repay debt (liabilities, equity)

• Pay Taxes

• Account for themselves (legal reports, audits)

• GRE/LE in HR Organizations

• Weak association with otherentities and transactions

• Legal information scattered


Legal Entities in R12Not your old “HR Orgs”…

• New Legal Entity User Interface

• LEs own bank accounts

• LEs used in tax determination

• LEs store accounting in ledgers

• Centralized legal information

• Identification

• Address

• Contacts

• Establishments & Registrations

Facilitates compliance

Legal EntityUpgrade Impacts

• Migration of 11i HR Organizations• GRE/LEs migrated as Legal Entities and Main Establishments

• LE’s country derived from country of location

• OUs (and inventory orgs) associated to the GRE/LE migrated asEstablishments

• TCA Parties for all!

• Migration of country-specific legal entity information

Legal EntityWhere is it used?

• Default Legal Context• Specified for an OU

• Transactions entered for OU

• OU ties to LE through GL’s Accounting Setup flow

• Legal Entity stamped on transactions during upgrade• Payables

• Receivables

• Used for…• eBTax 1st party LE determination

• Statutory reporting

• Funds disbursement

• User determines tax by assigningTax Codes

• Tax rules in code

• Global descriptive flexfields forcountry-specific tax attributes

• Granular setup at OU level


eBusiness TaxTax determination, not just tax codes…

• eBTax determines tax based onfacts about each transaction

• Tax rules you can see

• Tax attributes collected in fields onkey entities

• Configure tax rules once per regimeand share with your legal entities

Facilitates compliance

Improves auditability

eBusiness TaxBusiness Benefits

• Minimize the need for detailed regional tax knowledgeMore accurate tax calculations than picking tax code

Increases data accuracy and facilitates compliance

• Simplify your tax rules with TCA’s Geography modelGroup countries

Compound rates for state, county, city

• Standard repository of tax lines for productsEasier reporting

Easier reconciliation to transactions and accounting

E-Business TaxRegime-to-Rate Flow

•Tax ClassificationCodes and Rates

eBusiness TaxProduct Uptake and Upgrade Impact

• Transaction Taxes for Procure to Pay and Order to Cash

• Replaces:• Global Tax Engine

• Automatic Tax Calculation

• Brazilian AP/PO

• General Ledger Automatic Tax Calculation

• Migrated in the context of 11i tax setup• Each OU becomes a Party, mapped to an Establishment

• Each Country of OU becomes a Regime

• 11i tax codes migrate to rule setup w/in a regime

• country-specific tax information rolled in

eBusiness TaxTransition Options

• Identify opportunities• Look at your tax exceptions or manual processing (e.g. item,

intended use, place of supply)

• Look for commonalities and define simpler rules

For example: set up a classification rule to apply to manysuppliers or utilize the TCA Geography model

• Gradually layer eBTax rules on top of 11i Style tax• For example: set up rules for VAT recovery so system can

determine domestic vs. foreign transactions for you

• For example: Set up rules for USE tax

• Set of Books

• MRC

• AX Posting Set of Books

• AP Cash books

• FA tax book

• HR Organizations: GRE/LEassociated with a Set of Books


General LedgerUpgrade Impact

• Ledger & Accounting Setup

• Primary Ledger with ReportingCurrencies

• Secondary Ledgers

• Accounting Setup Manager: LegalEntity associated with Ledger

One place to manage globalaccounting rules, currencies,ledgers and sets

Link maintained to OUs

Responsibility Responsibility Responsibility

Role-Based AccessMore Productive Shared Services Operations

Holland

Legal Entity

Denmark

Legal Entity

Belgium

Legal Entity

Perform multiple tasks across operating unitswithout changing responsibilities

ResponsibilityResponsibility ResponsibilityResponsibility ResponsibilityResponsibilitySingle Responsibility

Functional TasksAccounting

Billing, Dunning& Collections

Procurement

Order Management

Payments

Data Management

Holland

Operating Unit

Denmark

Operating Unit

Belgium

Operating Unit

Multiple Organization Access ControlUpgrade Impact

• 11i Operating Units preserved in R12

• “11i Style” single org access preserved after upgrade

• OU field on user interface• All transactions

• setup data specific to OU, like transaction type

• Enhanced Multi-Org Reporting and Processing• For example: submit the Payables Open Interface Import and import

records for all Ous

• To take advantage of Multi-Org Access Control• Define security profiles

• Assign security profiles to responsibilities w/MO:Security Profile profileoption

• Optionally set MO: Default Operating Unit

Subledger AccountingCentralized Rules, Common Repository: Global Control

Payables InvoicePayables InvoicePayables Invoice

French RulesFrench RulesPlan ComptablePlan ComptableFrench CalendarFrench Calendar

EUREUR

LedgerLedger

SubledgerAccountingSubledgerSubledgerAccountingAccounting

DrDr CrCr

• Faster, EasierReconciliation

• Corporate Rules =AccountingStandardization

• Local Rules =Improved LocalCompliance

• Automate “Apples toApples” Adjustments

• Improved Audit-ability

• Improved InternalControl

Some Benefits

• Accounting Rules

• SarBox & 8th Dir.

• User Editable

• Subledger Daybooks(Journals)

• Subledger Balancing

• Reports, inquiries, openitems, et cetera

• MultipleRepresentations

• Common Posting to GLLedgers

• Real time or Periodic

What it is

Subledger AccountingProduct Uptake and Upgrade Impact

• Two styles of SLA uptake:1. Complete SLA setup seeded, migrated from 11i

• AX

• Payables

• Costing

• Loans

2. Hybrid SLA setup

• Receivables – AutoAccounting + SLA

• Assets – Workflow Account Generator + SLA

• Projects – AutoAccounting + SLA

• Procurement – Workflow Account Generator + SLA

Subledger AccountingHow does SLA determine what accounting toperform for a transaction?

SLA looks at the link between the transaction's OUand the ledgers linked in the GL Accounting Setupflow. Each ledger has accounting method specified.

Subledger AccountingTransition Options

• You get:• Visibility and access to balanced subledger accounting

entries• Centralized repository defining Accounting Rules

• Multiple Accounting Representations

• Control Accounts

• Reporting Currencies

• You can: Identify opportunities• Obsolete complex customizations

• Use the power of SLA sources to minimize manual overridesand plug gaps

• E.g. Use customer category to drive accounting

• E.g. Use supplier type to drive accounting

Upgrade ImpactDeciding to Upgrade

• Your 11i implementation will work in R12

• Pick and choose the features you want to implement• Over 300 to choose from!

• “Architectural” features too:

• eBTax for location-based taxes

• eBTax for VAT recovery

• Build a unique account w/SLA

• Define Ledger Sets for processing efficiency

• Allow access to multiple OUs with Multi-Org Access

Create and maintain tax rules centrally Generate multiple accounting representations

concurrently

Standardize financial processes Create and maintain accounting policies centrally Centralize financial systems Implement shared services Move to self-service reporting

Integrate performance management across thebusiness

Harmonize financial and management reporting Synchronize financial and operational data Analyze profitability across all dimensions

Manage multiple compliance frameworks with oneplatform

Integrate financial accounts and controls Monitor compliance, risk and performance

indicators together

Globalization“How do I manage complexity ofcomplying with internationalregulations, tax codes, and financialreporting standards?”

Complexity and Costs“How can I spend less money and timeon transaction processing whilesupporting business growth?”

Regulations and Oversight“How do I get a return on the expenseof managing increasing regulatory andoversight demands and risk?”

Profitable Growth“How do I partner with the business tomake the right investments in products,people, projects, and processes todrive growth?”

Challenge Best Practice

Path to Finance Transformation

• Do you want to…• Secure your bank and payment instrument data?

• Get reports you need faster?

• Get tax calculated and reported correctly?

• Retire your accounting customizations?

• Automate tax decisions?

• Have fewer payment runs?

• Reconcile tax to accounting to transactions more easily?

• Track changes to your processes?

• Integrate with third party applications?

• Have happier end users?

So, Why Should you Upgrade to Release 12?

Documents

R12 Financials Why Upgrade - Oracleopnpublic/... · • Inter & Intra – Company Balancing. Release 12 – Centralized Architecture ... • Transition to R12 new features incrementally