Title: International and Global Oracle Implementations Myths and Reality
1International and Global Oracle Implementations
Myths and Reality
- Hans Kolbe
- Celantra Systems
- Hanskolbe_at_celantrasystems.com
- (415) 846-2623
2What I will cover today
- Multi-Org impact
- Legal Compliance choices
- Implementation Strategies
Not Covered today
- Language
- Character sets and Multi-Byte
- Technical Architecture
3A Typical Wish-List
- create a multi-national multi-language finance
and logistics system - global chart of accounts and accounting standards
- global supply chain visibility
- compliance with local regulations and statutory
demands for accounting and reporting - shared regional logistics and financial service
centers to use economies of scale wherever
possible - allow effective operational support for
international and intercompany transactions while
complying with regulations for inter-company
pricing - provide effect structures for regional logistics
and production centers while avoiding
unproductive data duplication.
4Myth Global Implementations are not successful
- Success Texas Instruments - International
Roll-Out after US implementation in 16 countries
(Europe and Asia). Single install, Version 11.03,
12 months to go-live. Achieved global planning
and Europe-wide logistic and finance visibility. - Success Rational Software - International
Roll-out after US implementation to 23 countries
with 11I upgrade (Europe and Asia). Single
install, 10 months to go-live. Achieved
international order and logistics visibility - Mixed PPG - After US template 9 country
roll-out in Europe. Version 10.7. Separate
instance. 2 ½ years implementation country by
country. Parallel Australia and Latin America.
Areas of fragmentation remain in Order and PO
management.
5Key Differences in Design and their Impact -
Examples
- INTERNATIONAL TRADING MODEL, INTERCOMPANY
TRANSACTIONS AND ORACLE MULTI-ORG STRUCTURE - LEGAL AND STATUTORY COMPLIANCE STRATEGIES, LEGACY
SYSTEMS AND ORACLE GLOBALIZATIONS - IMPLEMENTATION STRATEGY GLOBAL OR REGIONAL
VERSUS COUNTRY BY COUNTRY
6Issue 1 International Trading Model and
Multi-Org Strategy
7Global Trading Model and Multi-Org Impact Myths
- If employed globally, Oracle Applications will
give us global visibility automatically
(optimistic). - With a correct setup, Oracle will give
operations, planning, finance, and reporting what
they need. (optimistic) - We have a working US Implementation. With some
minor adjustments it will be our global template.
(optimistic)
8Reality
- Supply Chain visibility across entities and
countries must impact multi-org strategy. - Shared service center requirements must impact
multi-org setup strategy. Data Visibility and
Access for users is restricted by SOB and
Multi-Org constraints. - Intercompany requirements must impact multi-org
setup strategy. Oracle Intercompany functions
are limited. - There is not ONE correct setup for international
implementations. - Balancing planning, operational, finance and
legal requirements is important. - Early impact analysis is needed to achieve global
objectives
9Standard ERP Multi-Org Model - Silo PPG Europe
PPG FR
PPG ES
PPG DE
PPG NL
PPG IT
PPG UK
PPG FR Sypsy
OU
OU
OU 3 x
OU
OU
OU
OU
OM, AR, IC, PO, AP
OM, AR, IC, PO, AP
OM, AR, IC, PO, AP
OM, AR, IC, PO, AP
OM, AR, IC, PO, AP
OM, AR, IC, PO, AP
OM, AR, IC, PO, AP
- Issues - duplicate setups and maintenance -
no visibility for order management across OU
boundaries - no Blanket POs across OU boundaries- logistics
operations are limited to one OU at a time -
business reporting across OU only through
financial consolidations or special tools
Purchasing data base, Toad, etc. - Duplicate inter-company transactions without
value to the business
10Multi-Org Proposal - The Challenge
Traditional Situation
Traditional ERP implementation models have been
built on the basis of separate legal entities and
country organizations. These entities cooperate
and exchange goods and services. Essentially all
subsidiaries operate as independent units.
The Silo model is assumed in most of Oracle
applications, including existing inter-company,
localization and globalization functionality as
well implementation and training models. This
model is the base for the standard Multi-Org
Setup in Oracle applications.
11Regional Operating Unit Model The Alternative
All Business Transactions including Order
Management and Customer Transactions, Cost of
Sales, Margins Purchases and Vendor Management
are handled through European Operating Unit
Direct Regional View of all Business
Transactions, Orders, Revenue, Purchasing,
Expenses, Margins
European Operating Unit
AR, INV, PO, AP, OM, OPM
External Bolt-On manages IC relations, prints
required document and directs entries to Local
Entity books
PPG IT
PPG SA, FR
PPG GmbH, DE
PPG BV, NL
PPG ES
PPG UK
Legal Set of Books, General Ledger Entries,
Trial Balance Submission for Corporate Reporting
and Consolidations, Statutory Reporting
Local Legal Adjustment Entries are booked at
country level
12Impact of Regional Operating Unit Model 1 -
- Simplify Eliminate Duplication
- Simplify Implementation and Ongoing Maintenance
(no duplication and continual synchronization of
setups) - Simplify Shared Service Centers (Customer
Service, Procurement, Finance) - no changing
responsibilities - Simplify and Speed up Monthly Closing, only one
sub-ledger
13Impact of Regional Operating Unit Model 2 -
- Cross-Entity Visibility
- Order View and Fulfillment
- Accounts Receivable and Collections
- Backlog, Allocations and Release Management
- Vendors, POs and Contracts (buy and receive
anywhere) - True external Revenue and Margins without
intercompany distortions - Automate Intercompany Transactions
- Intercompany Transactions (Commissionaire,
Buy/Sell, Agent) are automatically generated on
both entities
14Impact of Regional Operating Unit Model 3 -
- Risk Potential
- Common processes and setups across entities may
be very difficult to establish. - Correct Intercompany and Legal Entity statutory
reporting must be ensured through external add-on
process (see case studies). - Business may operate in single entity mode.
Evaluate business performance measures and
analysis. - Cross-entity visibility, reporting, and access
may not be desired.
15Multi-Org Options
- The Standard Multi-Org Setup fits well, when
- Subsidiaries operate essentially as independent
entities. - Data separation through Operating Unit Entity is
desired for security and reporting reasons. - Intercompany sales and purchases are handled
much in the same way as external ones. - Business Model and Organization can be changed
to fit the Oracle independent entity approach.
Standard Multi-Org Setup will not always avoid
the need for extensions or bolt-ons.
16Multi-Org Options
- Alternative Approach needs to be investigated
when - Multi-Tier trading model is used (supply chain
through subsidiaries with specialized production
and sales entities) - Commissionaire structure is employed or
fluctuating IC pricing - Shared Services across entities and countries,
cross-entity purchasing, cash settlements, or IC
settlement automation are desired.
Intercompany Simplification can be established
within traditional setup. Multi-Org options can
be mixed and individualized.
17Issue 2 International Legal Compliance with
Oracle Apps
18International Legal Compliance Issues with Oracle
Apps Myths
- We have a US Implementation. With some minor
adjustments it will be our global template
(optimistic). - Oracle has a plug-in set (Globalization,
Localization) to take care of most local
compliance issues (optimistic). - Major customizations are needed for compliance in
difficult countries (Italy, China, Brazil,
Israel, Portugal) (pessimistic) - MRC is needed in international implementations
(only in very specific circumstances)
19Chart of Accounts and Accounting Standards
- Government recommended COA in France, Spain,
Belgium, Greece, China, Korea and Japan. - Inventory Accounting, Accruals, Depreciation,
Year End closing are different in most countries.
- Not all US accounting principles are readily
accepted.
Mechanism needed for dual posting and recording
of adjustments
- Separate Set of Books for legal reporting with
use of consolidation functionality or AX Global
Accounting Engine - Use of separate balancing segment within the same
Set of Books - External Bolt-On application for legal compliance
transformation and reporting - Custom Extensions to be built or re-used from
other implementations
20Issues in Global COA Implementation
One US to many Local Accounts - One Local to
Many US Accounts (Payroll and Benefits)
Accounting Method Differences - Purchasing
and Inventory Receipts (total purchase price vs
standard cost - Variances) - Cost of
Sales and Inventory Accounts dont exist in
Fiscal Accounting Books (example Goodwill)
Value Differences - separate accounts (1,2,3
codes), (example Depreciation) - separate
entries - risks and options Date Differences -
(example Period Closing/accruals) separate
entries - risks and options
21Legal Compliance Transactions Tax (VAT and
Sales/Use Tax)
- Different requirements on VAT reporting, VAT
assessment and offsets. Detail review in each
country required. Validation of Oracle
Globalization needed in each country. Special
attention to be given to VAT calculation and
reporting on adjustments, discounts, bonuses.,
pre-payments, credits, refunds. - Synchronization of VAT requirements across Europe
and Asia can be achieved. (See Case Study Texas
Instruments). One set of parameters across
Europe with consolidated VAT and Intra-stat
reporting and country specific formats.
22Legal Compliance Other Issues
- Fiscally Required Audit Reports (Libro Giornale,
Grand Livre) may not be immediately available
through Oracle Standard Applications or
Globalizations. AX Global Accounting Engine may
be needed. - Sequencing requirements for VAT and Journal
Reporting may force additional setup work or
custom programming to ensure compliance (Italy,
Spain, France) - HR reporting - payroll, contractors, data privacy
laws - Bank formats, AP payments, AR receipts, future
dated payments, bill of exchange - International customs, duty, and export control
regimes may impose complex additional
requirements, depending on business and trading
model. - Language of screens, reports, and data may be
regulated.
23Issue 3 Global Implementation Strategies and
Decisions -
24Implementation Stages
Objectives transformed into Scope and Template by
- Technology / Apps Versions- Business
Priorities and Involvement- Resources- Time Line
Implementation turns into Support by- System in
Production- Project Team transforms- Evaluation
of Implementation- Measure against Scope and
Template- Assess future requirements for
objectives and scope- Assess changes in
Objectives and Resources
Template is transformed into Implementation by -
Program and Project Team - Deployment Sequence
- Adaptation of Local Differences - Changes in
Objectives, Scope, Technology, Resources, Time
Line- Test Sequence and Quality Standards
25Define Global Deployment Model
- Global Trading Model
- Supply Chain Planning
- Sales Management/Customer Relations
- Purchasing and Vendor Relations
- Mechanism and Compliance Standards
- for Statutory and Legal Requirements (Accounting
and Reporting)
26Define Global Deployment Model
- Logistics
- Shared Services
- Chart of Accounts, Intercompany, Consolidations
- Virtual Close, Financial Analysis
- Technical Base
- (Servers, Databases, Connectivity)
- Legacy Systems and Interfaces
- Implementation Strategy (central, regional,
local) - Program and Project Management