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Table of contents The heart of the matter 2 An in-depth discussion Financial reforms pay off in business value in a big way Comparing paths to migration Key lessons for an efficient migration Case study: A fast-food restaurant on the fast track to R12 4 7 8 10 12 What this means for your business 14 .
The heart of the matter Migration to Oracle E-Business Suite Release 12 (R12) presents an opportunity to create a flexible. global business platform for future growth. .
Yet in many ways an ERP’s features and functionality are only as good as its last upgrade. Yet it doesn’t enable the enterprise to customize and fully correct existing flaws in processes and implementation. This ground-up approach enables enterprises to leverage efficient new modules and to streamline and reduce existing customizations. Among PwC clients. A technical upgrade to E-Business Suite R12 is a fast and comparatively inexpensive approach. 1 Because an organization cannot migrate directly from R11i to Fusion. for instance. of course. As Oracle Premium Support for E-Business Suite R11i comes to a close. Upgrading ERP is a business decision that’s top of mind among top executives at companies that rely on Oracle E-Business Suite. plan international expansion and standardization of business processes. stakeholders must determine whether to perform a technical upgrade. a technical upgrade with specific process improvements or addition of new modules fuses the advantages of a technical upgrade with re-implementation—with some compromises. A re-implementation of R12 holds a powerful appeal for organizations that.A powerful Enterprise Resource Planning (ERP) system is indispensable for pace-setting organizations that seek a continuous competitive edge. Accordingly. The heart of the matter 3 . we believe organizations with Oracle Financials should consider planning a migration to R12. but it requires a sizable investment in resources and funding. a technical upgrade with business process improvements. or a re-implementation of R12. In the middle ground. we omit a migration to Fusion in this discussion. we have found that E-Business Suite R12 has demonstrated great potential for business transformation. The first step an organization must take in planning the migration is to determine the right approach:1 • A technical upgrade • A technical upgrade with targeted improvements • A business transformation/ re-implementation What follows are key considerations in navigating the transition path to R12.
Are you preparing for business expansion or merely business as usual? .An in-depth discussion Determining the right migration path demands a disciplined assessment of current and future objectives.
Figure 1: Evolution of Oracle applications Evolution of Oracle applications: From 11i to Fusion How Oracle’s E-Business Suite has evolved from Release 11i to the best-in-class business architecture of Fusion. when is now.For organizations that must keep pace with constantly evolving business strategies and processes. For those planning to revise business models and processes to achieve growth. procurement. The call to action is growing increasingly insistent as the economy shows signs of improvement and CEOs renew their focus on sustainable revenue growth.1 in May 2009. And for many leading companies.1 • R12 offers enhanced features and support for shared service and multi-GAAP requirements and Global Tax rules • It is based on Oracle Fusion Middleware to provide best-in-class integration • R12 provides an upgrade path to Fusion • Fusion has been redesigned from the ground up to deliver best-in-class architecture • It incorporates intelligence and analytics into Applications • Fusion offers seamless integration of functionalities from PeopleSoft and Siebel • It is now available for early adopters in business processes like financials. which ranges from Release 11i to the best-in-class Fusion Applications. migration to Oracle E-Business Suite Release 12 is not a matter of if—but when. Release 11i. the platform demonstrated real maturity with the launch of E-Business Suite Release 12. powerful platform for the future. which debuted in the mid-1990s. E-Business Suite R12 will provide a flexible. an uptick in companies launching or planning a migration has demonstrated an unambiguous confidence in E-Business Suite Release 12. 2011 • A premium for support took effect November 2011 • No support after 2013 • Release 12 was introduced in January 2007 • It has been very stable since Release 12. Since then. has been adopted across a wide variety of industries and global locations. and CRM An in-depth discussion 5 . Release 12 was introduced in January 2007.(See Figure 1). R12 represents the most powerful and appropriate choice among Oracle’s existing E-Business Suite products. Release 11i Release 12 Fusion • Release 11i became available in the mid-1990s and has been implemented across industries • It is very stable • Release 11i supports multi-GAAP and shared service requirements • It uses a limited adoption of Oracle Fusion Middleware • Regular maintenance expired October 31.
A migration to E-Business Suite R12 can drive efficiencies for many facets of the business. in other words—with a ground-up design for every process. Transformational scale Low Low to medium Heavy Technical upgrade Description Straight migration of current applications and existing customization to new target release Technical upgrade with Re-implementation/ targeted improvements business transformation Upgrade applications and refine targeted process improvement areas. Perform a technical upgrade to E-Business Suite R12 with select process changes in certain pre-determined areas. the move to R12 will be driven by strategic or tactical factors like reducing customizations. However.. leveraging new functionality. financial functions. internal and external communications. 2. Industries with changing business models and processes use the migration as an opportunity to transform the organization. A decision in the transition path will come down to three choices (See Figure 2): 1.g. you must migrate to R12 first. Figure 2: No single template for migrating to R12 No single template for migrating to R12 Selecting the right approach to move to Oracle Release 12 depends on your business objectives and evolving needs. and management of global supply chains. For many organizations. restructure every process to align with organizational structure Business value Business model changes Transform processes Longest Highest Highest Moderate Goal Vendor support compliance Fastest Lowest Lowest Lowest Time Cost Business value Risk 6 Practical considerations for evaluating an Oracle R12 upgrade .g. e. Fusion will become a truly viable migration option over the coming months as both Oracle and its partner community develop new applications. Perform a technical upgrade with targeted improvements of select processes or the addition of new modules. With more than 300 enhancements to its financial module—including support for sub-ledger accounting and a new global tax engine—R12 will hold particular appeal to CFOs and controllers. While not all modules are currently available.Fusion represents the next generation of Oracle’s E-Business Suite. 3. Treat the migration as a new implementation of E-Business Suite R12—a business transformation/ re-implementation. or creating a launch pad to Fusion. including product design and delivery. e.. among others. upgrade with P2P centralization or addition of new modules Support compliance and added functionality Medium Moderate Medium High Re-implement and redesign processes andsystem Ground-up. it is not possible to migrate to Fusion directly from R11i. combining best-in-class business applications with standards-based technology.
strategies. A migration also encourages stakeholders to review and revise strategies for future business development. and user needs will drive technology requirements. A migration— particularly a re-implementation— presents an ideal opportunity to clean up processes and retire unnecessary customizations. For example. Financial reforms that pay off in business value in a big way Oracle E-Business Suite R12 delivers overarching advances in centralized and standardized business processes that can greatly improve efficiencies. mergers and acquisitions (M&As) add (or subtract) business units from the corporate ecosystem. It is critical that stakeholders approach the migration from a business perspective because the evolution of business processes. PwC believes the Figure 3: A global financial architecture A global financial architecture redefined architecture of the financial module.and long-term value to the business and champion a revenueexpanding strategy that emphasizes growth and competitive advantage. stakeholders must assess how evolving business requirements have impacted the efficiency of E-Business Suite. (See Figure 3. And let’s not ignore the white elephant in the boardroom: funding.In determining the approach and scope of the migration. represents a move toward a truly global financial architecture and will strengthen financial systems across the enterprise. and over the course of years that typically results in a patchwork of fractured business processes. It is imperative that stakeholders judiciously consider short. Changes in operating processes often generate haphazard customizations to E-Business Suite. Technology enables business needs. it does not define them. which comprises more than 300 enhancements. Given the fitful economic recovery.) Ledger & ledger sets DrCr E-Biz Tax Subledger accounting (SLA) Inter company Bank model Multi-org access control Work in process Inventory Purchasing Receivables Payables Projects R12 includes a significant redesign of financial features with enhancements that include: • Ledger and ledger sets • Multi-org access control • Sub-ledger accounting • Unified bank model • Oracle payments • BI publisher • Oracle payments • E-business tax engine An in-depth discussion 7 . the discussion will inevitably turn to costs. For instance.
and deciding which approach is right for you requires that you assess the organization’s future business state as well as more in-depth examination of existing processes and technologies. companies that aim to transform their business will opt for a re-implementation. and reporting across operating units using a common data model. Support for sub-ledger accounting (SLA). more than 100 countries around the world already adhere to the standard. or require revisions to customizations and processes. The new Multi-Org Access Control (MOAC) feature enables seamless role-based access to multiple operating units from the same responsibility. Other improvements to R12 include: • Strategic sourcing • Support for reporting and analysis in its Corporate Performance Management applications • A powerful tool for analysis and reporting of profitability • New ways to manage and assess a global supply chain • Innovative global inventorymanagement features • Enhanced global talentmanagement capabilities Comparing the paths to migration Each path to migration to E-Business Suite R12 holds certain advantages. processing. Technical upgrade: A technical upgrade to E-Business Suite R12 can be a viable choice for firms that are satisfied with current applications and do not anticipate major organizational or business process changes. while those seeking less sweeping business expansion will opt for a technical upgrade or a technical upgrade with targeted improvements. The new E-Business Tax module provides a single repository of global tax transactions and enables the organization to centrally manage all tax transactions—across the enterprise and across the globe. as well as for non-US organizations that acquire US firms. This capability allows organizations to define and manage all business units from a single location without logging onto individual responsibilities. Although the US will not adopt IFRS until 2015 (at the earliest).Support for International Financial Reporting Standards (IFRS) is a powerful enhancement to the financial module in R12. 8 Practical considerations for evaluating an Oracle R12 upgrade . support of IFRS is a key capability for US companies with global operations or those that plan to acquire international firms. SLA support also empowers an organization to streamline its access. In additions. Furthermore. it is crucial to gain agreement among all key stakeholders before deciding on the path forward. in R12 will provide consistent accounting rules to all transactions and will enable parallel reporting between IFRS and Generally Accepted Accounting Principles (GAAP) systems. In general. The module can be configured for country-specific taxation and offers a consistent tax repository that can help an organization reduce compliance risks.
Despite these advantages. PwC believes a technical upgrade is suitable primarily for businesses whose operations are not likely to change. data conversion is limited and data migration is often a smooth process. The IT department must begin with an empty database and implement E-Business Suite R12 as if upgrading from a legacy system. PwC has found that an upgrade may require significant database modifications and may be more likely to generate technical challenges. We have found that the financial and. to a lesser extent. necessitating more resources and a longer implementation timeframe. channels. Deployment is accelerated because an upgrade requires fewer resources to configure the applications and migrate data. a technical upgrade with process improvements): Faster deployment and a significantly lower cost. a company can greatly benefit by modernizing and centralizing its overall procurementto-payment processes. to a lesser degree. All things considered. A re-implementation provides a blank slate for redesigning the technology configuration and business strategies for the future state of the company. What’s more. Oracle has fundamentally updated the functionality of R12. For instance. these complex modules often require considerable attention and care when they are implemented. For organizations planning enterprise-wide transformational change to business models or processes. Business transformation/ re-implementation: This approach will deliver the maximum potential of R12. Conversion of data to the new financial module. particularly sub-level architecture and tax. such as adopting new partners.A technical upgrade holds two key advantages over a re-implementation (and. Top executives must perform a disciplined review of current processes and future business objectives and work closely with IT to determine IT needs to support the future state of the organization. In some cases. such as AP/PO accruals. organizations must consider the impact of key configuration changes. An in-depth discussion 9 . A technical upgrade will not enable the organization to take full advantage of the capabilities of Release 12 because it does not allow for simplifications of processes and clean up of customizations. Technical upgrade with targeted improvements: This approach is similar to a standard technical upgrade. technology modules present the greatest opportunities for process improvements. tends to create technical problems in an upgrade. the financials module of R12 includes a number of key upgrades that are key to supporting compliance and adding functionality for the future. As discussed earlier. yet it enables an organization to prepare for future expansion by adding certain modules or process improvements that are critical to its operations. What’s more. organizations that intend to grow through international M&As will require an adaptable global business platform that supports IFRS and other advanced financial capabilities. Another consideration to the technical upgrade with targeted improvements approach is that while the cost will typically be midway between a technical upgrade and a re-implementation. yet it is a larger endeavor—and a more substantial investment—than either type of technical upgrade. This can be particularly advantageous for firms that foresee major shifts in the operating environment. which also hastens the migration. Re-implementation is also a more complex technical initiative. The technical upgrade assumes that a minimal number of customizations will be necessary. a re-implementation of E-Business Suite R12 will deliver the most long-term value. organizations considering a technical upgrade should reconcile and clean up data before it is converted. To avoid compatibility issues. or reporting structures. a technical upgrade may be too limiting for companies that plan business expansion and transformation. Not surprisingly.
our experience shows that businesses that have implemented R12 successfully make a thorough— and early—assessment of the impact on three critical components: people. testing. and technology. Overall. yet it would be foolhardy to discount the inherent challenges. PwC has found that generally a migration to R12 requires a minimum of six months for planning and deployment.A re-implementation also opens a window of opportunity to revise business processes that have been incorporated in E-Business Suite over its life cycle. we have seen that many companies underestimate the time required for a migration to R12. Development. and up to date. Additionally. Organizations with complex global installations of E-Business Suite should allow significant time for planning—and know that a complete implementation could stretch multiple years. processes. 10 Practical considerations for evaluating an Oracle R12 upgrade . We have successfully helped clients perform and understand pre-upgrade assessments in workshops designed for key stakeholders. Companies that have re-implemented E-Business Suite R12 have found that changes in the technical architecture—along with new functionality of E-Business Tax. In particular. a re-implementation enables the review and optimization of module-level business documents and transaction interfaces that have become outdated over time. stakeholders should plan activities and deliverables on the same timeframe as a new implementation of E-Business Suite. and staff training will call for substantial resources and expertise. Key lessons for an efficient migration Regardless of the migration path chosen. effective. leveraging our experience from a large number of R12 implementations. a re-implementation allows organizations to review and retire technical customizations that have become obsolete or inefficient. significant efforts in applications configuration and data migration will be necessary. even as the recession begins to lift and businesses face pressure to grow. The lingering effects of the global recession have left many CFOs loath to approve capital investments. Efficient automation of processes hinges upon a set of processes that are logical. Similarly. Chief among them: Re-implementation will require an upfront investment at a cost that may rival that of the original deployment. At the same time. the broad scope of a re-implementation requires considerably more time to plan and complete. sub-level accounting and Trading Community Architecture—demand as much as 70% more storage space. The long-term advantages of re-implementation are indisputable. the new financial and accounting architecture of E-Business Suite R12 may demand timeconsuming data conversion. Finally. troubleshooting. As a rule.
and be prepared for approximately 50% growth in database size. we recommend that organizations provide workshops for the migration staff on new features and functions. Interfaces and errors must be corrected to help maximize the efficiency and deliver the greatest value to the upgrade. PwC has helped a range of companies across the spectrum of industries successfully migrate to R12. you must prepare your people for a successful transition. • Commit to early and frequent communications with end users. • Allow for a 50% increase in database size. Oracle’s guidance calls for a 20% increase in storage capacity. we have seen implementations falter when organizations don’t have the full support and participation from the company leaders. Take time to clean interfaces and data before the migration begins. As with any substantial organizational change. and gathering feedback from users and business units. as well as glitches in non-core capabilities. It essential that top executives understand the future state of the organization and plan accordingly to ensure flexibility for future growth. • Revisit and revise all business processes and customizations before migration. But careful planning—and taking the precautions noted above—will ease the migration. focusing on end-to-end testing. An in-depth discussion 11 . We also have found that reconciliation of data between the pre. but in our experience a 40% to 50% increase is more likely. as well as meaningful input from stakeholders and end users. A smooth and efficient transition to R12 should not be treated as a technical upgrade. Also key is adequate time for testing. We recommend that you calculate disk-space requirements for all instances during the project. rather.and post-upgrade instances may require additional time because reports are presented differently in the two versions of E-Business Suite. It is essential that all technical and process issues. To help ensure efficient and timely testing. Specifically. Business and IT leaders should ensure that employees receive initial and frequent communications and training. are resolved before go-live. we believe that R12 is stable and robust.Tips for an efficient migration • Allow significant time for planning. • Provide product workshops for the migration team. primarily due to data model differences with sub-ledger accounting. and based on our experience. training. One of the notable challenges we have seen around technology is a substantial increase in database size during the upgrade. • Clean up interfaces and data to obtain the greatest value. it is a critical business initiative that can significantly contribute to the company’s future success. Organizations should allow time to test all normal and exception scenarios. The people component of a transition to R12 is a critical step that should be addressed early.
The company’s R11i implementation required too many manual processes. Looking forward.000 sites in 15 years. The company decided that the most effective way to resolve these issues— and to prepare for future growth and financial regulatory requirements— was an upgrade to Oracle E-Business Suite R12. and needed updated financial capabilities for global operations. the restaurant chain wanted to ensure that its application architecture could support growth and new standards such as IFRS compliance and Extensible Business Reporting Language (XBRL) reporting. A key factor in the decision to migrate was the new release’s ability to improve and automate its business processes. migrate. Our approach included detailed design reviews and rigorous testing to ensure the accuracy and efficiency of the architecture. from procurement to financial close reporting. we worked 12 Practical considerations for evaluating an Oracle R12 upgrade .9 was no longer meeting its needs. found that its Oracle Applications Release 11. Our team of Oracle experts carefully planned the implementation to clean up all customizations and to help ensure that all system interfaces were correctly configured. and benefit from an R12 migration that could be implemented without interruption of current business operations. Our team of Oracle E-Business Suite experts helped the company assess its business requirements and prepare for an R12 migration that accounted for its entire operations chain. which had mushroomed from one location to more than 1.5. lacked adequate interoperability with other systems. Throughout the implementation. The restaurant company engaged PwC to help it efficiently plan. streamline the size and usability of the application by rationalizing its existing customizations. The company also wanted to explore the new functionalities available in R12 and.Case study: A fast-food restaurant on the fast track to R12 A fast-growing fast-food restaurant chain. at the same time.
PwC’s assistance in planning and implementing the migration enabled the fast-food restaurant company to realize a wide variety of automated process improvements in the course of a year. a capability that has reduced the time required to deliver new reports by 65%. To back that up. the fast-food restaurant company is now prepared to support IFRS and XBRL reporting. Business users can now create new reports and modify existing reports. and accounting tasks like depreciation calculation of fixed assets. Implementation of the Procurement suite has streamlined processes and yielded multi-million dollar savings in indirect spending. Shared services centers that leverage MOAC functionality have seen productivity enhancements of up to 15%. What’s more. Using our business-led technology approach. validation of invoices. PwC’s integration of process and technology solutions helped put the fast-food company on the fast track for future functionality and growth. An in-depth discussion 13 . Monthly close processing and reporting is being accomplished 25% faster. we delivered thorough documentation for all phases of the project following PwC’s Oracle Applications Implementation methodology. and the addition of a secondary ledger has streamlined the company’s reporting for its UK operations. The company achieved significant gains in internal and external financial reporting. The restaurant chain also gained significant efficiencies in key business processes such as approval of purchasing documents. we helped the restaurant company carefully plan and manage its migration to Oracle E-Business Suite R12.with the company’s managers to facilitate user acceptance testing and help ensure training and seamless knowledge transfer to business users.
What this means for your business A carefully planned transition to E-Business Suite R12 requires a results-focused assessment of business processes and future needs. .
PwC can help you make the move with confidence. We believe organizations that seek growth. What this means for your business 15 . while less costly. We have proven expertise in assisting organizations with the design and implementation of Oracle E-Business Suite migrations.Migration to Oracle E-Business Suite R12 can set the course toward a competitive advantage and a readiness for the business needs of tomorrow. will update the organization’s ERP platform and will in some cases improve processes. A technical upgrade. Top executives must assess the organization’s current and future business needs and oversee a sweeping variety of decisions that encompass changes to people. We help you identify. We don’t believe in implementing technology for technology’s sake. A successful migration to E-Business Suite R12 is a critical step in preparing for the business environment of tomorrow. and achieve specific benefits of upgrading to E-Business Suite R12. then monitor and measure the benefits after the transition to help ensure that it drives future performance improvements. We take the time to understand your business needs and align the E-Business Suite implementation with your unique requirements and objectives. processes. however. the transition is no easy task. Whether upgrading or re-implementing. sustainable business success. Our approach is built around solving a business issue and delivering measurable results. but will not deliver truly transformational results. That’s where PwC can help. global expansion. manage. and technology. We fuse our disciplined business-process expertise with deep technical knowledge of Oracle E-Business Suite to build a framework for strategic. and transformation of business models and processes will achieve the greatest results from a re-implementation of E-Business Suite R12.
PwC Oracle Practice 703-203-6029 susanna. please contact: Gerard Verweij PwC Oracle Global Practice Leader 617-530-7015 gerard.pwc.com Susanna Pippen Director.pwc.com For a deeper conversation about migrating to Oracle E-Business Suite R12 and what it means for your business.verweij@us. PM-11-0262 .firstname.lastname@example.org. This document is for general information purposes only. PwC Oracle Practice 408-817-8114 eric. “PwC” refers to PricewaterhouseCoopers LLP.com © 2011 PwC. PwC Oracle Practice 925-457-5042 sanjeev.com Eric Schillig Director.com Sanjeev Dutta Director. and should not be used as a substitute for consultation with email@example.com@us. which is a member firm of PricewaterhouseCoopers International Limited. All rights reserved. each member firm of which is a separate legal entity. a Delaware limited liability partnership.www.
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