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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. .
but it requires a sizable investment in resources and funding. 1 Because an organization cannot migrate directly from R11i to Fusion. As Oracle Premium Support for E-Business Suite R11i comes to a close. 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. a technical upgrade with business process improvements. The heart of the matter 3 . Yet it doesn’t enable the enterprise to customize and fully correct existing flaws in processes and implementation. we omit a migration to Fusion in this discussion. Accordingly. This ground-up approach enables enterprises to leverage efficient new modules and to streamline and reduce existing customizations. of course. we believe organizations with Oracle Financials should consider planning a migration to R12. A technical upgrade to E-Business Suite R12 is a fast and comparatively inexpensive approach. 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. plan international expansion and standardization of business processes. Among PwC clients. for instance. In the middle ground. stakeholders must determine whether to perform a technical upgrade. Upgrading ERP is a business decision that’s top of mind among top executives at companies that rely on Oracle E-Business Suite. Yet in many ways an ERP’s features and functionality are only as good as its last upgrade.A powerful Enterprise Resource Planning (ERP) system is indispensable for pace-setting organizations that seek a continuous competitive edge. we have found that E-Business Suite R12 has demonstrated great potential for business transformation. or a re-implementation of R12. A re-implementation of R12 holds a powerful appeal for organizations that.
An in-depth discussion Determining the right migration path demands a disciplined assessment of current and future objectives. Are you preparing for business expansion or merely business as usual? .
the platform demonstrated real maturity with the launch of E-Business Suite Release 12. an uptick in companies launching or planning a migration has demonstrated an unambiguous confidence in E-Business Suite Release 12.1 in May 2009. The call to action is growing increasingly insistent as the economy shows signs of improvement and CEOs renew their focus on sustainable revenue growth. 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. procurement. And for many leading companies. when is now. E-Business Suite R12 will provide a flexible. which ranges from Release 11i to the best-in-class Fusion Applications. which debuted in the mid-1990s. Release 12 was introduced in January 2007. and CRM An in-depth discussion 5 . 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. Release 11i. For those planning to revise business models and processes to achieve growth. Since then.For organizations that must keep pace with constantly evolving business strategies and processes.(See Figure 1).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. powerful platform for the future. has been adopted across a wide variety of industries and global locations. migration to Oracle E-Business Suite Release 12 is not a matter of if—but when. 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.
and management of global supply chains. 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 . 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. Fusion will become a truly viable migration option over the coming months as both Oracle and its partner community develop new applications. e. For many organizations. While not all modules are currently available.g. among others. Perform a technical upgrade with targeted improvements of select processes or the addition of new modules. A migration to E-Business Suite R12 can drive efficiencies for many facets of the business. A decision in the transition path will come down to three choices (See Figure 2): 1. 3. 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. financial functions. in other words—with a ground-up design for every process. Perform a technical upgrade to E-Business Suite R12 with select process changes in certain pre-determined areas.g. you must migrate to R12 first. internal and external communications. the move to R12 will be driven by strategic or tactical factors like reducing customizations. including product design and delivery. However. Treat the migration as a new implementation of E-Business Suite R12—a business transformation/ re-implementation.Fusion represents the next generation of Oracle’s E-Business Suite. 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. 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.. Industries with changing business models and processes use the migration as an opportunity to transform the organization. it is not possible to migrate to Fusion directly from R11i. e. 2. combining best-in-class business applications with standards-based technology. leveraging new functionality. or creating a launch pad to Fusion..
strategies.In determining the approach and scope of the migration. the discussion will inevitably turn to costs. Technology enables business needs. Given the fitful economic recovery. It is imperative that stakeholders judiciously consider short. it does not define them. For example. A migration— particularly a re-implementation— presents an ideal opportunity to clean up processes and retire unnecessary customizations. A migration also encourages stakeholders to review and revise strategies for future business development. For instance. mergers and acquisitions (M&As) add (or subtract) business units from the corporate ecosystem. stakeholders must assess how evolving business requirements have impacted the efficiency of E-Business Suite. 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.) 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 . And let’s not ignore the white elephant in the boardroom: funding. 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. 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. which comprises more than 300 enhancements. (See Figure 3. Changes in operating processes often generate haphazard customizations to E-Business Suite. and user needs will drive technology requirements.
In general. it is crucial to gain agreement among all key stakeholders before deciding on the path forward. as well as for non-US organizations that acquire US firms. Furthermore. companies that aim to transform their business will opt for a re-implementation. SLA support also empowers an organization to streamline its access. in R12 will provide consistent accounting rules to all transactions and will enable parallel reporting between IFRS and Generally Accepted Accounting Principles (GAAP) systems. This capability allows organizations to define and manage all business units from a single location without logging onto individual responsibilities.Support for International Financial Reporting Standards (IFRS) is a powerful enhancement to the financial module in R12. The module can be configured for country-specific taxation and offers a consistent tax repository that can help an organization reduce compliance risks. more than 100 countries around the world already adhere to the standard. support of IFRS is a key capability for US companies with global operations or those that plan to acquire international firms. Support for sub-ledger accounting (SLA). or require revisions to customizations and processes. 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. and reporting across operating units using a common data model. 8 Practical considerations for evaluating an Oracle R12 upgrade . In additions. processing. 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. Although the US will not adopt IFRS until 2015 (at the earliest). 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. 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. The new Multi-Org Access Control (MOAC) feature enables seamless role-based access to multiple operating units from the same responsibility. while those seeking less sweeping business expansion will opt for a technical upgrade or a technical upgrade with targeted improvements.
To avoid compatibility issues. PwC believes a technical upgrade is suitable primarily for businesses whose operations are not likely to change. particularly sub-level architecture and tax. these complex modules often require considerable attention and care when they are implemented. Deployment is accelerated because an upgrade requires fewer resources to configure the applications and migrate data. This can be particularly advantageous for firms that foresee major shifts in the operating environment. Conversion of data to the new financial module. necessitating more resources and a longer implementation timeframe. In some cases. An in-depth discussion 9 . data conversion is limited and data migration is often a smooth process. Despite these advantages. which also hastens the migration. organizations that intend to grow through international M&As will require an adaptable global business platform that supports IFRS and other advanced financial capabilities. to a lesser degree. We have found that the financial and. such as adopting new partners. 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. PwC has found that an upgrade may require significant database modifications and may be more likely to generate technical challenges. All things considered. a company can greatly benefit by modernizing and centralizing its overall procurementto-payment processes. For organizations planning enterprise-wide transformational change to business models or processes. Not surprisingly. What’s more. a technical upgrade may be too limiting for companies that plan business expansion and transformation. 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. a re-implementation of E-Business Suite R12 will deliver the most long-term value. Oracle has fundamentally updated the functionality of R12. yet it is a larger endeavor—and a more substantial investment—than either type of technical upgrade. What’s more.A technical upgrade holds two key advantages over a re-implementation (and. A re-implementation provides a blank slate for redesigning the technology configuration and business strategies for the future state of the company. The IT department must begin with an empty database and implement E-Business Suite R12 as if upgrading from a legacy system. Re-implementation is also a more complex technical initiative. to a lesser extent. organizations must consider the impact of key configuration changes. technology modules present the greatest opportunities for process improvements. Technical upgrade with targeted improvements: This approach is similar to a standard technical upgrade. such as AP/PO accruals. organizations considering a technical upgrade should reconcile and clean up data before it is converted. the financials module of R12 includes a number of key upgrades that are key to supporting compliance and adding functionality for the future. or reporting structures. channels. 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. 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. tends to create technical problems in an upgrade. For instance. The technical upgrade assumes that a minimal number of customizations will be necessary. a technical upgrade with process improvements): Faster deployment and a significantly lower cost. Business transformation/ re-implementation: This approach will deliver the maximum potential of R12.
a re-implementation allows organizations to review and retire technical customizations that have become obsolete or inefficient. troubleshooting. effective. Efficient automation of processes hinges upon a set of processes that are logical. testing. PwC has found that generally a migration to R12 requires a minimum of six months for planning and deployment. our experience shows that businesses that have implemented R12 successfully make a thorough— and early—assessment of the impact on three critical components: people. At the same time. The long-term advantages of re-implementation are indisputable. even as the recession begins to lift and businesses face pressure to grow. yet it would be foolhardy to discount the inherent challenges. Key lessons for an efficient migration Regardless of the migration path chosen. Development. As a rule. 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. The lingering effects of the global recession have left many CFOs loath to approve capital investments. In particular. 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. the new financial and accounting architecture of E-Business Suite R12 may demand timeconsuming data conversion. significant efforts in applications configuration and data migration will be necessary. we have seen that many companies underestimate the time required for a migration to R12. the broad scope of a re-implementation requires considerably more time to plan and complete. and staff training will call for substantial resources and expertise. and up to date. Chief among them: Re-implementation will require an upfront investment at a cost that may rival that of the original 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. sub-level accounting and Trading Community Architecture—demand as much as 70% more storage space. We have successfully helped clients perform and understand pre-upgrade assessments in workshops designed for key stakeholders. stakeholders should plan activities and deliverables on the same timeframe as a new implementation of E-Business Suite. Overall. a re-implementation enables the review and optimization of module-level business documents and transaction interfaces that have become outdated over time. leveraging our experience from a large number of R12 implementations. Finally. and technology. 10 Practical considerations for evaluating an Oracle R12 upgrade . processes. Additionally. Similarly.
• Provide product workshops for the migration team. • Clean up interfaces and data to obtain the greatest value. and based on our experience. Specifically. PwC has helped a range of companies across the spectrum of industries successfully migrate to R12. We also have found that reconciliation of data between the pre. The people component of a transition to R12 is a critical step that should be addressed early. primarily due to data model differences with sub-ledger accounting. • Allow for a 50% increase in database size. But careful planning—and taking the precautions noted above—will ease the migration. An in-depth discussion 11 . To help ensure efficient and timely testing. we recommend that organizations provide workshops for the migration staff on new features and functions. we have seen implementations falter when organizations don’t have the full support and participation from the company leaders. Oracle’s guidance calls for a 20% increase in storage capacity.Tips for an efficient migration • Allow significant time for planning. It is essential that all technical and process issues. A smooth and efficient transition to R12 should not be treated as a technical upgrade. Interfaces and errors must be corrected to help maximize the efficiency and deliver the greatest value to the upgrade. We recommend that you calculate disk-space requirements for all instances during the project. are resolved before go-live. as well as glitches in non-core capabilities. Organizations should allow time to test all normal and exception scenarios. Take time to clean interfaces and data before the migration begins.and post-upgrade instances may require additional time because reports are presented differently in the two versions of E-Business Suite. as well as meaningful input from stakeholders and end users. • Commit to early and frequent communications with end users. and be prepared for approximately 50% growth in database size. It essential that top executives understand the future state of the organization and plan accordingly to ensure flexibility for future growth. training. • Revisit and revise all business processes and customizations before migration. you must prepare your people for a successful transition. it is a critical business initiative that can significantly contribute to the company’s future success. and gathering feedback from users and business units. we believe that R12 is stable and robust. rather. but in our experience a 40% to 50% increase is more likely. One of the notable challenges we have seen around technology is a substantial increase in database size during the upgrade. Also key is adequate time for testing. focusing on end-to-end testing. As with any substantial organizational change. Business and IT leaders should ensure that employees receive initial and frequent communications and training.
Looking forward. 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. and needed updated financial capabilities for global operations. Our approach included detailed design reviews and rigorous testing to ensure the accuracy and efficiency of the architecture. A key factor in the decision to migrate was the new release’s ability to improve and automate its business processes. The company also wanted to explore the new functionalities available in R12 and. The restaurant company engaged PwC to help it efficiently plan. we worked 12 Practical considerations for evaluating an Oracle R12 upgrade .9 was no longer meeting its needs. The company’s R11i implementation required too many manual processes. 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. migrate. found that its Oracle Applications Release 11. which had mushroomed from one location to more than 1. from procurement to financial close reporting. and benefit from an R12 migration that could be implemented without interruption of current business operations. at the same time. Throughout the implementation.Case study: A fast-food restaurant on the fast track to R12 A fast-growing fast-food restaurant chain.000 sites in 15 years. streamline the size and usability of the application by rationalizing its existing customizations. lacked adequate interoperability with other systems. 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.5. 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.
To back that up. 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. Business users can now create new reports and modify existing reports. Using our business-led technology approach. The restaurant chain also gained significant efficiencies in key business processes such as approval of purchasing documents. The company achieved significant gains in internal and external financial reporting.with the company’s managers to facilitate user acceptance testing and help ensure training and seamless knowledge transfer to business users. a capability that has reduced the time required to deliver new reports by 65%. Monthly close processing and reporting is being accomplished 25% faster. the fast-food restaurant company is now prepared to support IFRS and XBRL reporting. and the addition of a secondary ledger has streamlined the company’s reporting for its UK operations. An in-depth discussion 13 . What’s more. 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. we delivered thorough documentation for all phases of the project following PwC’s Oracle Applications Implementation methodology. we helped the restaurant company carefully plan and manage its migration to Oracle E-Business Suite R12. 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. Shared services centers that leverage MOAC functionality have seen productivity enhancements of up to 15%.
.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.
We help you identify. and technology. however. We fuse our disciplined business-process expertise with deep technical knowledge of Oracle E-Business Suite to build a framework for strategic. A technical upgrade. We have proven expertise in assisting organizations with the design and implementation of Oracle E-Business Suite migrations. A successful migration to E-Business Suite R12 is a critical step in preparing for the business environment of tomorrow. Whether upgrading or re-implementing. processes. while less costly. will update the organization’s ERP platform and will in some cases improve processes. What this means for your business 15 . the transition is no easy task. We don’t believe in implementing technology for technology’s sake. and achieve specific benefits of upgrading to E-Business Suite R12. sustainable business success. That’s where PwC can help. Top executives must assess the organization’s current and future business needs and oversee a sweeping variety of decisions that encompass changes to people. and transformation of business models and processes will achieve the greatest results from a re-implementation of E-Business Suite R12. global expansion. but will not deliver truly transformational results. manage. PwC can help you make the move with confidence. We believe organizations that seek growth. We take the time to understand your business needs and align the E-Business Suite implementation with your unique requirements and objectives.Migration to Oracle E-Business Suite R12 can set the course toward a competitive advantage and a readiness for the business needs of tomorrow. then monitor and measure the benefits after the transition to help ensure that it drives future performance improvements. Our approach is built around solving a business issue and delivering measurable results.
pwc.com © 2011 PwC.pwc.www.com Susanna Pippen Director.verweij@us. “PwC” refers to PricewaterhouseCoopers LLP. please contact: Gerard Verweij PwC Oracle Global Practice Leader 617-530-7015 gerard. PwC Oracle Practice 925-457-5042 sanjeev.pwc. and should not be used as a substitute for consultation with professional.pwc.com Eric Schillig Director. PwC Oracle Practice 408-817-8114 eric.dutta@us. PM-11-0262 . All rights reserved. each member firm of which is a separate legal entity.pwc. a Delaware limited liability partnership. PwC Oracle Practice 703-203-6029 email@example.com Sanjeev Dutta Director.pippen@us. This document is for general information purposes only.com For a deeper conversation about migrating to Oracle E-Business Suite R12 and what it means for your business. which is a member firm of PricewaterhouseCoopers International Limited.
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