Celantra Systems:
Prepared by Hans Kolbe
Partner, Celantra Systems
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■ 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
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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
www.celantrasystems.com
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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
www.celantrasystems.com
415-730-1131
Visit the Celantra Systems Exhibit at Table 21
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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
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Traditional Silo Model 1 Ledger-1 Legal Entity-1 Operating Unit
Secondary Ledger Primary
Ledger
Secondary Ledger Primary
Ledger
Secondary Ledger Primary
Ledger
Secondary Ledger Primary
Ledger
Secondary Ledger Primary
Ledger
LE
OU
LE
OU
LE
OU
LE
OU
LE
OU
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Secondary Ledger
Secondary Ledger
Secondary Ledger Primary
Ledger
LE
OU
LE
OU
LE
OU
LE
OU
LE
OU
Advanced Silo Model 1 Ledger-n Legal Entities-n Operating Units
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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
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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
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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
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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
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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
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Legal Entity and Accounting Ledger representing a Legal Entity
BSV (Balancing Segment Value) representing a Legal Entity
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Traditional Silo Model 1 Ledger-1 Legal Entity-1 Operating Unit
Secondary Ledger Primary
Ledger
Secondary Ledger Primary
Ledger
Secondary Ledger Primary
Ledger
Secondary Ledger Primary
Ledger
Secondary Ledger Primary
Ledger
LE
OU
LE
OU
LE
OU
LE
OU
LE
OU
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Secondary Ledger
Secondary Ledger
Secondary Ledger Primary
Ledger
LE
OU
LE
OU
LE
OU
LE
OU
LE
OU
Advanced Silo Model 1 Ledger-n Legal Entities-n Operating Units
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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
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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
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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?
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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.
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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
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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).
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Mrunal Potdar
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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
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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
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