Archive for category TECHANGES
Putting Numbers In Boxes – Part I
Posted by Helene Abrams in Basic Accounting, Chart of Accounts Structure, Designing a Chart of Accounts, TECHANGES, Upgrade vs. Reimplementation on January 17th, 2009
Once on a consulting engagement, an accountant told me that he described his job to his five year old daughter as, “I put numbers in boxes.” That was a great explanation, and it helped define a pretty abstract concept. There are two basic premises to putting numbers in boxes. The first is that when you put a number in a box, there is some logic behind what box that number goes into, and second, that someone else can find the numbers in the boxes. The following actual case study provides insight into designing an accounting flexfield so that the “boxes” can help organize the important segments of the business. >>MORE
A Dollar Today Is Worth More Than a Dollar Tomorrow
Posted by Helene Abrams in Return on Investment Analysis, TECHANGES, Upgrade vs. Reimplementation on December 20th, 2008
Making an investment in your E-Business Suite today for a big pay-back tomorrow
Your friend must choose between two offers:
- You offer your friend $1,000 to be paid a year from now.
- You offer your friend a smaller amount today – maybe $900.
Your friend will choose the second offer: A dollar today is worth more than a dollar tomorrow. The old adage rings true in IT organizations. It is difficult to justify a project to streamline your EBS and make it align with business changes when money is tight. An IT department is willing to spend more money over time maintaining current applications rather than making an investment today. It is much easier to continue to spend money and effort reconciling systems with thousands of spreadsheets and custom reports because the money goes out in a slower stream and is less “visible”, doesn’t need approval from stakeholders, and the users have lived with the pain for so long that postponing a solution for a year or two later doesn’t really matter. By investing a chunk up front to change their applications, companies can reduce long-term maintenance costs caused by having different EBS instances, thousands of operating units, and different charts of accounts, but companies choose not to spend the money now and to spend more over the course of a number of years. One large cost today seems bigger than many smaller costs over time, but in reality, making an investment in streamlining systems ends up saving the business money in the long haul.
The cycle begins when implementing Oracle E-Business Suites. To contain costs, and because a company didn’t understand how to utilize all the features of EBS, the original configuration was not scaled to accommodate growth. Companies had already made the investment in Oracle’s E-Business Suite, only to find that with time, the business has changed and the implemented system hasn’t changed with it. Instead, it is much more difficult to recognize a return on their ERP investment because multiple instances or operating units have been configured differently due to requirements that are different for parts of the business. ERP doesn’t represent the “Enterprise” anymore, and the Total Cost of Ownership (TCO) is going up – money is spent on “running” the business, maintaining systems, and developing workarounds to meet changing regulatory and reporting requirements, rather than on innovation and on utilizing the system to get more revenue to the bottom line. It is difficult to perceive the value in spending money on a project now rather than maintaining myriad configurations over a longer period of time.
Political attributes of management can also get in the way – consider when lines between budgets become blurred and spending buckets spill over into others. It is common for companies to dip into other budgets and misuse funds not originally appropriated for maintaining current applications to do just that. One company was spending 40 percent (about $2.5 million) of its application development budget to maintain interfaces between disparate systems, while it could have more aptly used the funds for their original purpose: removing – rather than promoting – silos and disparity. In an E-Business Suite environment, such improvements include consolidating operating units, inventory organizations, or entire instances, or redesigning the current chart of accounts (moving to a single enterprise version) to minimize cross-validation rules, utilize logical ranges, and reduce data entry and spreadsheets.
Let’s return to the original offers and tweak them a bit:
- You offer your friend $1,000 to be paid a year from now, if he is willing to invest $100 today
- You offer your friend $1, 000 to be paid ten years from now if he is willing to pay $80 a year for the next ten years.
In this case, it is much easier to justify spending the money upfront and to go with the first option. A dollar today is worth much more than a dollar tomorrow. Unfortunately, the second scenario is much closer to the situation in IT than the original offers, but IT management fails to see it. Projects to change existing applications invariably get pushed to the back burner. The ongoing costs of maintaining current systems are so much higher than a comparative immediate investment to change systems that it is difficult to understand why so much capital is poured into maintenance. It is wiser to develop an effective plan to change current applications and align them with future business requirements, as well as to use the money and effort saved in maintenance to respond to new opportunities and become more competitive in the long term.
How Much Can You Save Now?
Posted by Chris Busbee in Data Systems, Return on Investment Analysis, TECHANGES, Trends & Technology on December 20th, 2008
If you are able to determine how much you spend with each of your suppliers, you may be able to renegotiate your discounts. Many suppliers will provide volume discounts if you commit to certain spending levels. By looking at your total spend across all operating units, you may be able to reach the thresholds required for greater discounts.
By increasing the number of days a company holds on to cash, additional interest will accrue, whether using a daily sweep checking account or another instrument for cash management. The following calculator analyzes the benefits of extending the payment terms with suppliers and calculating the value of having the cash on hand for an additional “float” period. >>See How Much You Can Save
Leveraging Purchasing in a Multi-Org Environment
Posted by Helene Abrams in Data Systems, News & Articles, Return on Investment Analysis, TECHANGES, Trends & Technology on December 20th, 2008
When companies originally set up multi-org in Oracle’s E-Business Suite, security and control were the primary drivers for separating data into different operating units. Plants wanted to run their own operations, negotiate their own contracts with suppliers, and set up their own invoicing, inventory and receiving practices. Moreover, there was a competitive environment among different divisions, product line operations, and general managers. One part of the company did not want another part to see the transaction detail. Little attention was paid to maximizing the purchasing power of the entire enterprise to negotiate better terms and discounts with common suppliers.
As a result, companies often set up hundreds of operating units, each with its own freight carriers, matching tolerances, approval hierarchies, supplier terms, and contracts. It was difficult to determine how much business was conducted with a particular supplier, difficult to determine the enterprise cost of managing and maintaining different supplier relationships, and the burdened costs of different inventories. >>MORE
IFRS and CGAC Compliance in E-Business Suite: Mandates for Change
Posted by Helene Abrams in Chart of Accounts Structure, TECHANGES, The Changing Enterprise on November 20th, 2008
Globalization of the financial community requires a degree of transparency in financial operations and reporting. The Federal Government, the Securities and Exchange Commission (SEC), and the International Accounting Standards Board (IASB) are in the process of mandating standards and controls to force public companies and Federal Agencies to change their accounting processes to provide external transparency to investors, market analysts, executives, and board members and to provide internal controls to manage their own financial risks. In addition to regulating to mitigate risks, having standards facilitates integration, reporting, and common practices among companies who may merge or among agencies who need to consolidate to the same organization, or organizations that share operations as for a shared services center. Adoption of International Financial Reporting Standards (IFRS) is imminent – many countries have already implemented (Australia, the UK, and Israel), Chile and Korea are expected to implement in 2009, and Brazil and Canada in 2010 and 2011, respectively. Some industries (i.e. mining and metals) are leading the pack. The United States lags behind, with a full implementation expected to be required by 2014 for all public companies.
Meanwhile in the public sector, the new Common Government-wide Accounting Structure (CGAC), a provision mandating that all federal government agencies (of which there are over one thousand) convert their existing accounting structures to a common chart of accounts, will enter the early adopter stage in the next few years. Although there is no defined deadline for transitioning to CGAC, any number of events triggers the requirement to make the accounting change (e.g., implementing a new financial management system, upgrading major existing systems, or moving to a shared service provider). For most agencies, the mandate will be required by the end of 2010 because many software companies will sunset support for current software releases. As an example, Oracle Corporation has announced that it will not support the most widely-used version (11.5.10) of its flagship enterprise resource management (ERP) system, E-Business Suite (probably the most popular ERP system for federal agencies), in November 2010 under its standard support agreements, forcing a major upgrade to the newer Release 12. On a macro level, both IFRS and CGAC are new ways of doing business that encourage transparency and enable comparisons. They are not simply mechanical sets of rules to be placated with a bolt-on application with the sole purpose of generating financially compliant reports. The purpose of this article is to outline some of the major departures from US GAAP (Generally Acceptable Accounting Principles) by IFRS and CGAC, to analyze how such changes will affect current business practices, and to take a detailed look at how E-Business Suite users will need to change their accounting flexfields in order to comply with the new regulations. >>MORE
Oracle Forums and Social Networking
Posted by Chris Busbee in External Sources, TECHANGES, Trends & Technology on October 18th, 2008
Take a minute to browse through the below list of Oracle-related forums and social networking sites; they are knowledge rich and can prove very useful.
- ERPStuff – World’s Leading Oracle E-Business Portal
- OracleNet – Oracle Social Network on Ning
- Solution Beacon @ Blogspot – Solution Beacon, LLC is a leading provider of expert-level resources for the most widely used Enterprise Management Systems and Technologies.
- ITToolbox – ITToolbox Oracle Knowledge Base
- OAUG User Community – Oracle Applications Users Group Community Forum
- Ospace – Oracle Applications Business Community
- Oracle Community – The Social Network for Oracle People
- OracleAppsForum – A forum kept by the people at OracleAppsBlog.
- Oracle Metalink – My Oracle Support
- Oracle Technology Network – Oracle Technology Network provides services and resources to help developers, DBAs, and architects build, deploy, manage, and optimize applications.
- Oracle DBA Forum – A Forum by Burleson Consulting
- Oracle FAQs – A collaborative wiki with the purpose of answering frequently asked questions Oracle questions.
- DBA Support – The Knowledge Center for Oracle Professionals
- SearchOracle – Covering Today’s Oracle Topics
LinkedIn Oracle Groups
The Bridge to Nowhere
Posted by Helene Abrams in Data Quality, Data Systems, TECHANGES on September 18th, 2008
The Bridge to Nowhere
Integration of diverse applications means building bridges that connect one application to another in order to pass data between them. There are several ways of integrating data, from writing code to insert data that is generated in one system into another system to using a hub-type technology with several adaptors that also includes a messaging system and a broker for routing and transformation of the data. In the above diagram, the blue lines represent data movement and messages that are passed through adaptors to other systems. The blue circles represent adaptors that are connected to a common interface table in a system. The red lines represent interfaces directly between any two systems. These interfaces are generally SQL code used to extract the data from one system and load it into another system.
As is obvious, both methods of integration can be very complex and difficult to maintain. The data may be in different formats in each of the systems, the interface code or the adaptors may need to change as each system is upgraded, the loads have to be done in a particular sequence to obtain the correct results, and the data itself may be inconsistent. Decisions have to be made regarding which application contains the correct data, how to deal with conflicts, and the frequencies of loads.
There are some basic principles that will help streamline the process of integrating data among disparate systems.
- Try to keep the same type of data within a single application, or at best, identify a single place where data is created and updated. This is the underlying concept of master data management efforts. All applications that reference that data should be “read only”.
- Set up data standards. Create naming standards and formatting standards for all systems across the enterprise. For example, all descriptions should be the same field length, telephone numbers should all be in the same format (for example, countrycode.areacode.number.extension), punctuation should be eliminated, and abbreviations should be standardized.
- Create a Data Map. This can be done in a spreadsheet, in a database, or by using database design software. The purpose of the Data Map is to show what each data element is mapped to in other systems and the “load instructions” for that data element. The data map is cross referenced for two-way interfaces. If using a spreadsheet, you would have a worksheet for each table with the attributes or columns of the table on the left of the spreadsheet (column A) with each interfaced system/table going across the top (Row 1). The first Application should be the current system. In the first intersection cell (B2), put the format of the data of the current system (i.e. varchar 10). After the current system is documented, allow 3 columns for each application to be integrated with the current system. In the second intersection cell (C2), put the table/column name that is the destination for the first data element in the first application to be integrated. In the third column (D2), put the format required for the first system to be integrated (i.e. varchar 25). In the fourth column (E2), you will document the transformation code required to get the data from the format in column B into the format required for Application B, Column D (i.e. rpad 15). Continue on until you have all the interfaces mapped and the transformations documented for each application to be integrated. Keep the data map current as systems are updated.
- Limit the interface to a “need to know” interface. In other words, if an application does not need to use the information as a trigger for a procedure or an action within that system, do not bring it into the new system.
- Define the processes that create, read, or update each type of data and put security and access controls in place so that the governance and ownership of the data is unambiguous.
Finally, evaluate all data that is integrated for completeness, consistency, and correctness between each source and each target. Validate that the correct number of records are transferred, the resulting data, and the reconciliation between each source and target so that the bridges you are building are stable enough to withstand change.
Under the Covers with Subledger Accounting
Posted by Chris Busbee in Basic Accounting, TECHANGES, Upgrade vs. Reimplementation on August 17th, 2008
The major change in R12 is that there are no Sets of Books. Instead, there are subledgers that handle the transaction processing from other modules (AP, AR, FA, etc.). The Set of Books is replaced by the term Ledger. For a slightly technical look at R12’s subledger accounts, read on.
Operating a Shared Service Center in R12 with E-Business Suite
Posted by Helene Abrams in Data Quality, Data Systems, Return on Investment Analysis, TECHANGES, Trends & Technology, Upgrade vs. Reimplementation on July 17th, 2008
Multi-National Corporations (MNCs) with widespread global operations must treat separate (usually location-defined) parts of their businesses differently due to local statutory requirements, taxes, accounting methods, languages, and currencies, yet still must comply with corporate standards. The business must manage issues around security, ownership, reporting, and control for all transactions. For a MNC operating in 47 different countries spread across 6 continents, daily operations is a tedious exercise that requires that each business unit operates and supports operations independently while sharing data among other parts of the enterprise to leverage sourcing opportunities, inventory, and back-office transactions. Implementing a SSC enables the company to significantly reduce costs by having a central pool of employees to handle day-to-day tasks such as Procurement, Disbursement, Collections, Fixed Assets, Tax Compliance, Training & Development, and Payroll. Instead of carrying out these tasks in each of the 47 different countries and repeating each operation 47 times, a SSC combines similar tasks carried out throughout the enterprise and shares the overhead cost of providing these services internally. Offering these tasks as Shared Services enables the corporation to capitalize on the economies of scale and scope (in the form of reduced headcount, reduced operating costs, greater service levels, greater leveraging of resources, etc.) that come with the elimination of duplicate efforts. >>MORE
Agility by Design: Finished But Not Done
Posted by Helene Abrams in TECHANGES, The Changing Enterprise, Trends & Technology, Upgrade vs. Reimplementation on June 20th, 2008
Enterprise applications must continually change in order to support the ongoing business changes of the enterprise. Enabling and facilitating those changes so that they can occur with a minimum of cost and business disruption is the essence of designing for agility. The backbone of potential design agility is most often the enterprise resource planning (ERP) application, whether it is the Oracle Business Suite, SAP, or another similar system. In larger firms, of course, the ERP systems do not run in isolation – the ERP systems are to differing degrees supplemented, complemented, and duplicated by other applications. The average Fortune 1000 company has approximately 300 different “enterprise” systems. Nevertheless, since the ERP systems contain the most central data and business processes of the company, their implementation is a focal point for design agility. >>MORE