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Breaking through the Multi-Org barrier

with EBS R12 & Fusion Concepts


Session ID#: 10039
Many Legal Entities - Single
Operating Unit in EBS R 12, a
breakthrough in Multi-Org design

Prepared by:
Hans Kolbe
Managing Partner, Celantra Systems REMINDER
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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
■ hanskolbe@celantrasystems.com
■ www.celantrasystems.com
■Visit
415-730-1131
the Celantra Booth 1230 at Collaborate 2015

3
San Francisco, CA 94114 +1 415 824 8344, e-mail:
info@celantrasystems.com
http://www.celantrasystems.com

Global Implementations and Process We address and specialize in


Alignment: Plan, Design, and Execute - Legal and Operational Structure design to support operational efficiency and
reporting compliance
Celantra Systems provides innovative
- Languages and International Document Formats
solutions to today’s most vexing issues - Global Chart of Accounts and Financial Reporting
in multi-national ERP configurations. - Tax, Statutory, Trade and Customs compliance
Celantra specializes in helping large - Intercompany automation and reconciliation
organizations tackle the challenges of - Transfer price elimination (Profit in Inventory)
operational efficiency and process - Integration with Boundary Systems
- Instance Strategy and Design
synchronization while improving and
- IFRS and Multi-GAAP Accounting
automating financial, legal, and trade We offer project planning, system design, program management, and
compliance. Celantra has a proven supplementary staffing assistance.
track record of success in simplifying
multi-national implementations,
reducing implementation timeframes, Celantra Systems Customers
and satisfying challenging local in-
country requirements.
Celantra Approach: Guidelines for Global
Implementation Support
■ Single Global Structure regardless of country,
currency, language, accounting and tax regime

■ Variations to be transparent to operator


and business user community

■ Flexible for future business growth, acquisitions,


and changes in business or legal model

■ Easy to support and upgrade

The Implementation Model aligns to company objectives and


culture
Standard (“Silo”) ERP Multi-Org Model
All Subsidiaries are Parallel Entities
Shared Operating Unit Model
General Concept
Benefits of Shared OU Model
■ Support “Top Down” business and management structure

■ Simplify ongoing maintenance (no duplication and continual


synchronization of setups)

■ Simplify implementation process, roll-out, CRPs, testing. Operating


unit parameter need to be setup only once in all operational
modules. GL setup is not simplified - local GL books required.

■ Simplify shared service centers (customer service, procurement,


finance) - no changing responsibilities

■ Simplify and speed up monthly closing


Silo Model
1 Ledger-1 Legal Entity-1 Operating Unit
1-1-1
Cross Legal Entity Operating Unit (Cleo)
1 Ledger-N Legal Entities-1 Operating Units
1-N-1
Potential Multi-Org Options
Examples
Scope
■ Qualcomm standard international functionality
▪ Provides financial control standardization
▪ Normalizes financial results and enhances visivility
▪ Secondary statutory ledger Provided, when necessary
Country-specific
Local GAAP Ledger
General Ledger
Local Currency –
Fixed Assets
US GAAP Ledger
General Ledger

Fixed Assets
Extensity
Travel Payroll
Operating Unit
MySource
Markview HR Data
Accounts Payable
AP Imaging Qtime
Labor Tracking
Purchasing iProcurement
BottomLine
(or Custom)
Electronic Pmts
Project Accounting
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
What are the critical requirements for an LE

■ Document sequencing
▪ General Ledger journal sequencing
— Separate issue from multi-LE OU
▪ Sub-ledger transaction sequencing
■ Accurate automated accounting
▪ Default accounting strings, normally provided at OU level
■ Transaction Tax compliance (VAT) & Reporting
▪ VAT calculation and reporting
■ Legal entity customer facing forms
▪ Purchase Orders, Invoices
Multi-LE OU – Pros & Cons
Pros Cons
■ Document sequencing ■ Impact on business operations
▪ General Ledger journal resulting from configuration
sequencing differences is not known
— Separate issue from multi-LE ■ Impact on support functions (IT &
OU FSG) not known
▪ Sub-ledger transaction ▪ Will require further testing to
sequencing determine impact
■ Accurate automated accounting ■ Not intended to support
manufacturing-related activities
▪ Default accounting strings,
normally provided at OU level ■ If a legal entity grows too large, it
could entail configuring a separate
■ Transaction Tax compliance (VAT) & OU at a later date
Reporting
▪ VAT calculation and reporting
■ Legal entity customer facing forms
▪ Purchase Orders, Invoices
Current State Project Goals
 One Legal Entity (Multiple BSVs)  Consolidate US OUs to one OU and design scalable
 One Ledger Source to Pay business process for operational
 Multiple OUs (owns multiple Inventory Orgs) efficiency gains
 Common Asset book (Corporate and Tax Books)  Define Legal Entities using standard functionality
and assign BSVs (company codes)
Proposed State  Reduce PO cancellations significantly
 One Legal Entity per BSV requiring sub-ledger  Improvise US Payments accuracy and turn around
support (more than One Legal entity) time
 One Ledger  Accounting accuracy
 Common OU (Own all US Inv orgs)  Reduce Period close overhead (multi OU to single
 Common Asset book (Corporate and Tax Books) 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
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

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
The Celantra Solution for R12
customers-Cross-Legal-Entity-
Operating unit “CLEO”
Opportunities through CLEO Design

■ Simplified Design – Single Ledger, Single OU


■ Align Operating Unit with operating structure
■ Reduce Month-End Activities and Reconciliations
■ 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
CLEO
1 Ledger-N Legal Entities-1 Operating Units
1-N-1
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?
Looking at Key R12 functionality used for
CLEO
Using the R12 LE functionality
▪ In conjunction with accounting setup
— to support your corporate and local reporting
— to support your GL ledger sequencing (gapless where needed)
▪ In conjunction with EB-Tax
— to fulfill the regional transaction tax (VAT etc.) requirements
▪ In conjunction with subledger document sequencing
— to fulfill country specific transaction sequencing requirements
▪ To default Payables and Receivables transaction ownership
▪ To identify intercompany transactions and implications
▪ To support your payments and receipts with correct legal
ownership assignment
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?


▪ Reporting ledger can be used.
Please contact for more
information about CLEO

info@celantrasystems.com

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