Multi-Org Simplification R12

Multi-National SIG User Presentation

Webinar January 29, 2015

Prepared by Board of the MN-SIG and :

Hans Kolbe, Celantra Systems, Board Chair
Jacques Bouchet, Oracle, Board Member
Sangeeta Sameer, GE, Board Member
Hans Kramer, Cummins, Associate Board Member
Bill Grimes, Ciena, Associate Board Member
1

Agenda
1.

2.
3.
4.
5.
6.
5.

Introduction - MN-SIG Chair Hans Kolbe, Celantra Systems

- Mission of the MN-SIG
- Multi-Org Challenges and Confusion, Terminology
R12 Direction and Options Oracle (Jacques Bouchet, Oracle)
GE User Presentation - Multi-Org, Challenges and Evaluation
(Sangeeta Sameer)
Cummins User Presentation Decision Process On the road to
Multi-Org simplification (Hans Kramer)
Ciena User Presentation Questions, Challenges on Ledgers and
Op Units (Bill Grimes)
Celantra Systems - Available Solutions, Configurations, Add-On
Utilities
Questions - Answers

Multi-National SIG
Issues of the Multi-National SIG

Mission of Multi-National SIG

Application Upgrade Strategy - R12,

Fusion Apps, Co-Existence Options for
multi-nationals

Processes and Issues specifically

facing global or multi-country Oracle
applications users

Organize exchange of ideas and

experiences

Legal Entity, Operating Unit, Multi-Org

Access (Shared Services, Compliance,
Localizations)

Take active role in OAUG

Enhancement process with Oracle
Corporation

Inter-Company (multi-tier, trading,

accounting, pricing, )

Global Project Management and

Support

Synchronize with other SIGs and

GEOs

Global Chart of Accounts Secondary

Ledgers

Multi-language, multi-byte (MLS &

NLS), Time Zones

Tax and Legal Compliance Challenges

(coordinate solutions in different
regions)
Global Single Instance

Cross-Module and Cross-Geographies

Board Members:

Hans Kolbe, Celantra Systems Chair

Thomas Simkiss, BizTech Corp. Enhancement Liaison
Michelle Zaharoff, Agilent Vice Chair
Sangeeta Sameer, General Electric Membership Liaison
Dan Chaffer, Qualcomm
Kevin Elshaw, State Street Bank of Boston
Alex Fiteni, FILLC, E-Business Tax Lead
Markus Hentschel, Bearing Point
Jacques Bouchet, Oracle Global Strategy, Oracle Liaison,
Mrunal Potdar, Facebook
Maryanne DiGravio, Terex
Adrian Jones, Specsaver Associate member

We are looking for new board members and invite you to join our board !

International Multi-Org
Configurations
Simplification
Options & Challenges

Drivers and Goals for Oracle Multi-Org

Simplification

Reduce IT implementation time, configuration, testing, and complexity of support

Model the legal structure independently of operational structure and accounting

structure

Reduce time to integrate acquisitions and roll-out new modules and functionality

Ensure global processes by reducing number of configurations and

synchronizations challenges

Simplify and speed up monthly closing

Silo Model (Ledger and OU)

1 Ledger-1 Legal Entity-1 Operating Unit
Secondary
L Laerdyger
Prim
Ledger

Secondary
PrimLaerdyger
Ledger

Secondary
PrimLaerdyger
Ledger

Secondary
PrimaLryedger
Ledger

Secondary
PrimaL
ryedger
Ledger

L
E

L
E

L
E

L
E

L
E

OU

OU

OU

OU

OU

Partial Silo Model (OU)

1 Ledger-n Legal Entities-n Operating Units
Secondary
Secondary
Ledger
Secondary
Ledger
PrimaryLedger
Ledger

L
E

L
E

L
E

L
E

L
E

OU

OU

OU

OU

OU

Cross Legal Entity Operating Unit (CLEO)

1 Ledger many Legal Entities - 1 Operating Unit
Secondary
Ledger
Secondary
PrimaryLedger
Ledger

L
E

L
E

L
E

L
E

L
E

OU

Countries, Currencies, Legal Entities

Words we use / Terminology is important

Country = Currency: Not always. Yes a single country normally has its unique
local statutory currency, except for EURO countries.

Functional Currency - Local = Corporate: Not always. Local Statutory currency

most often equals the corporate functional currency, except where corporate
currency is the predominant transaction currency (FASB 52).

Legal Entities - Oracle LE = Real Legal entity: Not always. We may differentiate
between a branch versus a subsidiary. The branch is not a standalone
company, but merely a registration of a foreign company with limited authority and
limited compliance obligations. A subsidiary on the other hand is a standalone
regular company. Both are legal structures, and the Oracle LE can represent
both types of structures.

10

Key Assumptions and Challenges

Multi-Org Simplification must serve the business: Operational and business

drivers overrule any of these configurations. If business need separate processes
and management structures, they should be separated into separated Operating
Units and/or ledgers. We are discussing the what are the Oracle technical or
external legal constraints? And how do we deal with them?

Drivers / Challenges need to be addressed

Accounting Defaults
E-Bus-Tax VAT, Sales Tax Integration
Sequencing in Sub-Ledgers & GL journals drives separate ledgers (not just OUs).
External Document Print Programs
User Access and Risks of User Error (Defaulting and Security Rules)
Shipment & Project based Intercompany
IT interfaces and Programs may need to be adjusted
Local and Functional currency
Country Localizations where needed and used
Business Processes mapping / may need adjustments

11

Jacques Bouchet-Oracle
Director Global Strategy

12

13

14

LE Support in EBS 12 Architecture Standard Functions

R12 includes new functionality to use LE to drive LE & country compliance ,
especially in new modules such as EB-Tax , Payment, Cash Management. Op
Unit is merely a default.

Challenges with Multi-Country Op Unit

Country Localization & Currency Features
EBS 11.i

Country context given by profile option per Responsibility

Change country = change Responsibility
Multiple transaction currencies (MRC) (duplicates transactions)
EBS 12
Country context for transactions given by Operating Unit (OU);

Change country = assign OU for each transaction in Sub-ledgers

Only one functional currency for transaction reporting = primary ledger currency
Multiple currencies for Accounting Entries only

15

Country Localization feature support in EBS 12

Architecture

Country context for transactions

Drives Global Descriptive Flexfield behavior (additional fields given by localizations)
Drives some country specific features (i.e. Withholding)
Drives some localization features packaging (often country per Op Unit or Responsibility)
Country statutory currency for reports
Needs to be Primary Ledger currency since no more MRC at transaction level

Oracle standard sub-ledger reports only available in primary functional currency,

Secondary functional currency needs reporting extension / customization

Applies to

VAT report and accounting

Turnover report / AR Invoice register

Withholding tax calculation and reports

16

Considerations for Multi-Org Structure Decisions

Balance cost benefit of setting up

More sophisticated structures (multiple Ledgers & OUs) with less customization cost
Simpler structures (common Ledger, common OU) with customization cost

Decision points does a country need:

Sequential Numbering per Legal Entity

Transaction level

Accounting Entry (Journal) level

Local Chart of Account (Germany, France, Mexico) for accounting electronic filing and audit
Electronic Fiscal Audit file per LE at Transaction level
VAT reporting at transaction level (EB-Tax reports by LE available)
Withholding tax processing

17

Sangeeta SameerGeneral Electric

IT Leader

18

Introduction

PGS (Power Generation Services) operates in

more than 100 countries around the world
Started Release 11i implementation in 2004,
with Italy go-live in 2006, followed by 5 more
countries in 2007
Shared Operating Unit Concept introduced to
Speed up country deployments
Last set of countries rolled out in 2012

19

73 Countries Implemented
2006
Italy

2007

2008

UK
Ireland
Spain
France
Germany

Austria
Switzerland
Czech Rep
Denmark
Luxembourg
Norway
Netherlands

2009
Japan
Singapore
Taiwan
Belgium
Hungary
Israel
Latvia
Romania
Sweden
Poland
Croatia
Finland
Portugal
Cyprus
Korea
Malaysia
Thailand
China
Hong Kong
Brunei
Australia
New Zealand
Vietnam

2010
Indonesia
Turkey
Greece
United States
Saudi Arabia
Qatar
UAE
Kuwait

2011

2012

India
Egypt
Pakistan
Ghana
Canada
Iraq
Lebanon
Bahamas
Tunisia
Brazil
Argentina
Dominican
Bahrain
Republic
Chile
Ecuador
Colombia
Panama
Algeria
Morocco
Jamaica
Mexico
Nigeria
Oman
Peru
Trinidad & Tobago
Venezuela
Virgin Islands
South Africa

Design change in 2008 Implementation Speed changed

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Shared OU - Why we deviated from Country/LE pure

design to include cross-country OUs in 11i?
From single ledger per country & separate OU per LE to a hybrid model that included
single ledger and single OU across countries and LEs

Time & Money

Cost benefit of individual implementation/set up of country solution

Focus on low volume/low complex countries delayed more complex country roll outs

In Europe 20 countries made up ~3% of region volume! (common theme globally)

Maintenance & Support

Significant maintenance required for multi Operating Units/Set Of Books

Multiple modules and GLs to close every month

Testing of multiple Operating Units

User Experience

Shared Service Users had to switch responsibility when working across countries
Country/LE pure implementations for low complex/low volume countries did not make economical sense

21

Implications of shared OU in 11i

What we needed to address .
-

Trial Balance in local currency if different from Functional currency

Accounting in daily rates
Oracle Localization reports
Local Chart of Accounts These countries were not put in Shared OU
VAT @ daily rate on invoices customized for this
Sabrix required customization to handle multiple countries from single OU
Invoice printing program more complex (language, rates)

What was not impacted

All GE Management reporting in appropriate currencies

Ability to report Permanent Establishment (PE) and non PE for GEII LE by country
Visibility to originating currency of all transactions
Key tax documents remained inherently compliant (invoices)
All Cognos reports including the custom Stat and Tax reports built

22

Decision Criteria for Shared vs. Pure OU

COUNTRY

Permanent
establishment
YES

NO

Sales volume
significant

NO

YES

Complexity
Score > 500
YES

NO

SHARED
OPERATING
UNIT
Luxembourg

Count OU

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

OU_IFS_IT
OU_PS_ES
OU_PS_GB
OU_PS_IE
OU_PS_DE
OU_PS_FR
OU_PS_AT
OU_PS_JP
OU_GETAS_TR
OU_PS_US
OU_PS_BH_GEWLL
OU_PS_DZ_GEIOA
OU_PS_LA_GEISA
OU_PS_NG_GEIONL
OU_PS_OM_GEILLC
OU_PS_VE_TMCA
OU_PS_ZA_GESA
OU_PS_IN
OU_PS_IN_GEPSIL
OU_PS_PK
OU_PS_EC_ENSYS
OU_ESHQ_LA_U_GEII
OU_PS_CA_GECII
OU_PS_AE_GEEFZE
OU_PS_LA_U_GEIOC
OU_PS_EURP_U
OU_PS_EURP_E
OU_PS_ASIA_U
OU_PS_ASIA_U_GEIOC
_U
OU_PS_ME_U
OU_PS_LA_U_GEII

Dedicated/
#
Shared
Countrie
s
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Dedicated
1
Shared
14
Shared
5
Shared
9
Shared
3
Shared
Shared

13
12

Switzerland

Latv
ia

COUNTRY SPECIFIC

Denmark

Norway
Turkmenistan
Poland
Belgium
Romania
Finland

23

R12 Multi-org Scenarios at GE

Silo Model PGS reasons

CLEO model Appliances reasons

Need to override default legal entity

context using SLA or other setups, e.g.
multiple transaction types in AR
Risk that a legal entity will have access
to Suppliers and Customers where no
contractual relationship exists
Complex data segregation rules required
to ensure that cross legal transactions
cannot be booked in GL
Ability to isolate closing issues to a
specific OU
Cannot use standard Oracle
Intercompany to generate AR and AP
transactions
MOAC and Ledger Sets solve usability
issues in R12

Single Ledger, Single OU ease of Closing

Periods
Operations like sourcing can be oblivious
selecting the right Legal Entity/OU
Easier Master Data Management, no need
to create multiple records if Suppliers and
Customer cross Legal Entities
Use SLA to drive accounting per LE needs
Sub Ledger transactions will be tied to
Balancing segment which in turn is linked
to LE so you have individual transaction
linked to LE.
Use features like Data Security, Security
rules, GRC to secure/restrict data
Ease of acquisition/re-organization as you
have to change SLA & other rules instead
of creating another OU
Reduced implementation timelines
because of reduced setups, data load and
testing time

24

Hans Kramer, Cummins

Supply Chain Capabilities - Design
Enhancement Leader

25

Introduction to Cummins

To be filled by Hans Kramer or Mike

26

27

28

29

30

Bill Grimes-Ciena
Senior Director-Accounting

31

Introduction to Ciena
Ciena is a network specialist focused on communications networking solutions that enable converged, nextgeneration architectures, optimized to create and deliver the broad array of high-bandwidth services relied
upon by business and consumer end users. Ciena provides equipment, software and services that support
the transport, switching, aggregation, service delivery and management of voice, video and data traffic on
communications networks.
Ciena has been using Oracle for over 15 years, started with 10.xx, upgraded to 11.5.6, re-implemented into
11.5.10 and now plan to upgrade to 12.4.
November 2009, prior to acquisition of the optical networking and Carrier Ethernet assets of Nortel, Ciena
had the following configurations in 11i

3 SOBs
28 LEs
2 LEs that sold product

March 19, 2010 acquisition completed and Ciena had the following configurations in 11i:

16 SOBs
48 LEs
17 LEs that sold product

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Impact of the acquisition

Due to the limited time Ciena was forced to make Oracle configuration
decisions with limited information. Our attempt was to group the new legal
entities into 3 categories.
1. Easy - Sales and Marketing entities (limited or no direct sale of product),
2. Medium - Drop Ship entities (sale od product to customers utilizing drop
shipments from another Ciena Entity), and
3. Hard - Complete Build out (direct sale of products to customers).
By grouping our entities it allowed Ciena to begin the build out of Oracle utilizing
templates and limited meetings regarding structure. Ciena determined easy
build outs could be done by simply adding a new LE and OU to an existing
SOBs. Medium build outs would require a new SOBs along with new LE and
OU but would have limited need for inventory setup. Hard build outs would
required all of the above and a more complicated build out of the inventory
modules.

33

Implications of this strategy long term

Need to resolve issues with creating STAT financials, currently using dual
entry, is there a better solution? Fixed assets has been particularly difficult?
How do we resolve issues with creating local compliant invoices, historically
issues with language, number sequencing, folio?
How do we create reconciliation reports between our STAT and GAAP
financials?
Is there a way to create VAT and other tax reports directly from Oracle?
How do we solve FX issues translation vs re-measurement?
How do we maintain a system, that allows Ciena to apply patches,
customizations have made this difficult?.

34

Ledger Structure R12

All legal entities within a ledger must, at a minimum, share:

Currency
Chart of accounts
Calendar
Accounting Convention
There are other situations that may require a separate ledger such as
document sequencing and localizations. Based on these requirements Ciena
combined its legal entities into logical Ledgers based on currency and the
need for document sequencing. As a result we are recommending 35 Ledgers
in R12 which is an increase of 16 as compared to 11i. Going forward we
recommend the local currency of a legal entity determine the ledger currency.

35

Primary and Secondary Ledgers

Ciena determined the primary ledger should be used for US GAAP and
secondary ledger will be used for statutory reporting. This decision was made
for two main reasons:
1. Statutory audits, in general, are annual while our US GAAP financials are
reviewed and reported on a quarterly basis
2. The timing requirements for close are more stringent for SEC reporting than
for STAT reporting. Example many times we request extensions for STAT
but this is never done for US GAAP.

36

Operating Unit Structure r12

Based on Cienas experience/growth over the previous 4 years we realized
Ciena needed at least one full inventory org in every country it had a legal
entity. This was due to the sale of product, need for spares depots and the
ability for customers to return goods locally. Similar to what Ciena had done
previously we grouped our legal entities into three main groupings.
One of three groupings was used:
1. Complete build out of Operating Unit including inventory - Used for any entity
2.
3.

that would sell inventory, hold spares, or the first legal entity opened in a country
Financial build out of Operating Unit - Used only if another entity, within this country,
already has an inventory or spares; and No need for legal entity to sell product or hold spares
General Ledger build out Used only for holding companies that have very limited or
no financial transactions

37

Operating Unit Structure continued

Ciena then needed to decide whether to create a separate operating unit for each
legal entity or share an operating unit. To answer this question we did a simple
Pros and Cons.
While there where many pros and cons the team was simply more comfortable
with the one to one relationship. With new features (MOAC and ledger sets)
Ciena believed the cons could be overcome if setup properly and setting up a
one to one relationship this would allow the most flexibility.

38

Partial Silo Model (OU)

1 Ledger-n Legal Entities-n Operating Units
Secondary
Secondary
Ledger
Secondary
Ledger
PrimaryLedger
Ledger

L
E

L
E

L
E

L
E

L
E

OU

OU

OU

OU

OU

39

Hans Kolbe, Celantra Systems

Partner

Some Answers to the Challenges

Solutions to enable Cross-LE-Op Units

40

Introduction to Celantra Systems

info@celntrasystems.com
www.celantrasystems.com

Global Implementations and Process Alignment:

Plan, Design, and Execute
Celantra Systems provides innovative solutions to
todays most vexing issues in multi-national ERP
configurations.

Celantra Compliance Rule Engine and Compliance Sequencing Utility

Celantra has released a number of automated compliance tools, including a new Intercompany
Utility, based on the Celantra Compliance Rule Engine.
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.

41

Solutions to enable Cross-LE-Op Units

- Configurations
- Partner Solutions / Bolt-On Utilities
- User Extensions

Additional Solutions available. More detail to be requested

42

Configurations
EB-Tax Configurations for Multiple LEs & Countries within single OU

43

Configurations
Legal Entity Ownership and Accounting Defaults - Sample

Accounting / Legal Ownership Identification:

Legal/ Finance / Tax Requirement Requirements not negotiable
needed for external documents, financial, tax reporting.

44

External Solutions - Sequencing

Statutory Sequencing Utility Gapless
By Legal Entity or VAT Registration
Separate by LEs within single ledger
Separate by LEs Within single Op Unit
Multiple Sequences within LE (VAT Registration)
Separate Invoice& Credit Memo
Separate DOM, EU, NON-EU (Italian Requirements)
Comply with multiple calendars (local versus corporate)
Comply with multiple LEs on single journal
Statutory Journal Reporting w. Sub-Ledger Detail (FEC)
Available from secondary or consolidation ledger
From Corporate to Local Chart of Accounts
From Corporate to Local Calendar
Accommodate non-Oracle systems detail into single report/extract

45

External Solutions - IC

46

47

48

49

50

Challenges Raised by this panel to be answered

Raised by

Topic

Jacques Bouchet

Transaction level

Jacques Bouchet

Accounting Entry (Journal) level

Jacques Bouchet

Local Chart of Account (Germany, France, Mexico)

Secondary Ledger/ Primary Ledger
for accounting electronic filing and audit

Jacques Bouchet

Jacques Bouchet
Jacques Bouchet
Jacques Bouchet
Sangeeta

Sequential Numbering per Legal Entity

Electronic Fiscal Audit file per LE at Transaction

level
VAT reporting at transaction level (EB-Tax reports
by LE available)
Withholding tax processing
Trial Balance in local currency if different from
Functional currency

Solution Area

Solution Available

Defined by Ledger
Celantra Sequencing Utility
Defined by Ledger; Manual Override by Op.
Celantra Sequencing Utility
Unit
Defined by Ledger; no overrides
Celantra Sequencing Utility

Detail Jrnl Extract Utility / Partner Products

Secondary Ledger/ Primary Ledger

Detail Jrnl Extract Utility / Partner Products

E-Bus Tax

Standard Configuration

AP Functionality

Standard Configuration, unless localization

Defined by Ledger

Reporting Currency ledger / secondary ledger

Sangeeta

Accounting in daily rates

Defined by Ledger

Sangeeta

Oracle Localization reports

Local Chart of Accounts These countries were
not put in Shared OU

Operating Unit / Country

need to override corporate FX Rates; in most countries corporate rate is

accepted
Review Localization functionality / separate Op Unit if needed

Defined by Ledger

Secondary COA available

Sangeeta
Sangeeta

VAT@ daily rate on invoices customized for this Not related to Ledger or Op Unit;

Sangeeta

Invoice printing program more complex

(language, rates)

Document Printing / currency rates

Sangeeta

Data Segregation and User Access

Data Separation / Access

Sangeeta

Unwanted IC transactions

Data Separation / Access

Sangeeta

STD Oracle IC does not work

IC

Sangeeta

LE Default / Account Defaulting

Accounting

Hans Kramer

Accounting & Legal Ownership

Accounting

Hans Kramer

Data Segregation and User Access

Data Separation / Access

Hans Kramer
Bill Grimes
Bill Grimes
Bill Grimes
Bill Grimes
Bill Grimes

Intercompany
STAT Books
Invoice Numbers / Sequencing
Language
VAT Calculation and Reports
FX Issues

IC
Secondary Ledger/ Primary Ledger
Defined by Ledger
Not Dependent on Ledger / Op Unit
E-Bus Tax
By Ledger

Bill Grimes

Patch Application

Apps Footprint

need to override corporate FX Rates; in most countries corporate rate is

accepted
Printing Program needs to update parameters
Configurations of Data Set Access, Defaulting Rules & Form
Personalization
Configurations of Data Set Access, Defaulting Rules & Form
Personalization
Intercompany Utility
Configurations of Data Set Access, Defaulting Rules & Form
Personalization
Configurations of Data Set Access, Defaulting Rules & Form
Personalization
Configurations of Data Set Access, Defaulting Rules & Form
Personalization
Intercompany Utility
Secondary COA available; Adjustment periods, etc.
Celantra Sequencing Utility
Standard Functionality
By LE, not Operating Unit
Reporting Currency ledger / secondary ledger
avoid country specific solutions; use standard Oracle; get bolt-on that are
independent from Oracle table structure.

51

Thank you Questions and

Suggestions, please

Contact:
Hans Kolbe hanskolbe@celantrasystems.com

52