Overcoming Uncertainty in Common R12 Setups: COA, Ledger, Legal Entity, Operating Unit Options, Considerations and Lessons Learned Hans Kolbe, Celantra Systems Inc. Stafford Warren, Consultant NorCal GEO Training Day January Copyright Celantra Systems

Celantra Systems: Celantra Systems provides international program management services with a strong focus on multi-org, inter- company, global compliance and implementation issues. The key element in our approach is the alignment of operational efficiency, legal/tax compliance and management reporting. Our goals are: - Single global structure across country, currency, language, accounting and tax regime - Variations are transparent to operator and business user community - Flexibility for business growth, acquisitions, or other changes in business or legal model - Ease of support and upgrade Former and current clients include Trident Microsystems, Terex, UPS, Xerox, Tektronix, British Telecom, Assa Abloy, Yahoo, Texas Instruments, PPG, State Street Bank, Xilinx, Dionex and others. Hans Kolbe has managed and advised software implementation projects for over 15, global projects for over 12 years. His extensive knowledge on Oracle applications is combined with a formal background as a German attorney, trained in international and comparative law. Ph: + 1 (415) NorCal GEO Training Day January Copyright Celantra Systems

Stafford Warren: Oracle Financials Consultant/Project Manager E XPERIENCE 15+ years Analyzing and Implementing Information Technology Solutions, in High-Tech Industries, through roles as Lead Business Analyst, Software Implementation Consultant and Project Manager We partner with Silicon Valley High-Tech Companies: VisaCiscoFranklin Templeton Yahoo!AgilentOracle Consulting VerisignElectronic ArtsSymantec BMC SoftwareCalpineIntuit Information Management Group

1. R12 Multi-Org Structure, high-level setup steps and configuration options 2. Setup Steps a) Business Group and Legal Entity b) Ledger c) Op Units and Balancing segments 3. R12 Gotcha: Addresses, Locations, Organizations 4. R12 Flexibility and Restrictions: Multiple values balancing segments, Legal Entity, Op Units Agenda NorCal GEO Training Day January Copyright Celantra Systems

Starting Point, Process and Assumptions - We are presenting results from a R12 ‘Greenfield” implementation, Application Version This is not an upgrade - We are comparing multi-org setups between R12 and 11I and are sharing our learning, pointing out remaining questions, surprises etc. -Version has some significant differences to earlier R12 versions impacting the behavior of the HR Locations records (which are important for the multi-org setup) -We have not completed this specific implementation cycle. However, CRP testing has successfully been done confirming that our multi-org structure supports correct sub-ledger transactions, intercompany scenarios and tax application. We know this setup works. NorCal GEO Training Day January Copyright Celantra Systems

Section 1 Multi-Org Decisions NorCal GEO Training Day January Copyright Celantra Systems

R12 Multi-Org Structure and Decisions Business Group (used for employees and HR functions, no difference to 11I Chart of Accounts – basis for all other operational and financial setups) – no difference in setup and structure Legal Entity – New Legal Entity Configurator Responsibility in Web-Form) - – Lots of different setup and decisions to be made (very different from 11I) Create Ledger - New Accounting Setup Manager Responsibility in Web-Form – Lots of different setup and decisions to be made (very different from 11I). Formerly GL Set of Books. Create Operating Unit and assign to Ledger New Accounting Setup Manager Responsibility in Web-Form – Additional restrictions and impacts, differences between R12 and 11I. – Upgrade and conversion limitations – NEEDS another slide with options and business impact NorCal GEO Training Day January Copyright Celantra Systems

Multi-Org – LE Configuration Options – View A – Multi-Org Comparing Implementation Guide 12.1: Comparing 11I to R12: Options look very similar, only terminology has changed: Set of Books  Ledger NorCal GEO Training Day January Copyright Celantra Systems

Multi-Org – LE Configuration Options – View B Financial Implementation Guide 12.1: Variety of Options and Configurations is discussed in detail, 2-13 (worthwhile reading!)  Accounting Setups with One Legal Entity  Accounting Setups with Multiple Legal Entities  Accounting Setups with No Legal Entities  Using Accounting Setups with No Legal Entities for Management Purposes  Using Accounting Setups with No Legal Entities for Consolidation Purposes Note: There is no general Oracle standard solution to accommodate a requirement single Operating Unit operating in two Legal Entities in R12. Options to resolve these challenges are being discussed within the Multi-National and other SIG Groups. NorCal GEO Training Day January Copyright Celantra Systems

Multi-Org – LE Configuration Options – View B NorCal GEO Training Day January Copyright Celantra Systems

Section 2 Setup Steps NorCal GEO Training Day January Copyright Celantra Systems

Steps and Relationships Business Group Legal Entity Ledger (needs chart of accounts) Associate Balancing Segment Associate Operating Unit NorCal GEO Training Day January Copyright Celantra Systems

R12: Business Group, Legal Entity and Ledger are independent entities NorCal GEO Training Day January Copyright Celantra Systems Is there a business function in using one without the other?

Step 1: R12 COA Setup Chart of Accounts to be created (not covered in this presentation) Fundamentally the same as in R and previous versions (additional functions on sub-ledger control accounts see later slides) All in Java Forms NorCal GEO Training Day January Copyright Celantra Systems

Step 2: Create Business Group (Global) - same setup as R11I We create a single global business group. We prefer this because otherwise you create additional complexity for approval hierarchies. Each approval hierarchy is limited to 1 business group. For international companies approvals of expenses, assets purchases, etc. often are routed from subsidiaries to headquarters for larger amounts. This would force duplication of employees. Multiple Business Group are used only for payroll localizations (localizations are assigned by business group). NorCal GEO Training Day January Copyright Celantra Systems

Screen Shot – (in Java Form) NorCal GEO Training Day January Copyright Celantra Systems

Step 3: Legal Entity Setup Use Legal Entity Configurator Responsibility (Web-Form) to define: - Location /Address (Web-Form) - Tax Profile (not required at LE level) - Registration - Create Jurisdiction (skip if existing) - Territory (skip if existing) – potential Gotcha - Create Location with Address (required) – see later slides for Gotchas - Create Organization (Java – Form) - Establishments (usable for tax): Legal Entity setup automatically creates one establishment at legal entity level. - Contact Information (not required at LE level) - Intercompany Exceptions (not required at LE level) - History (not required at LE level) NorCal GEO Training Day January Copyright Celantra Systems

Step 4: Assign Balancing Segment to Legal Entity or Ledger Use Web-Form: GL Responsibility A balancing segment can be associated either to the Legal Entity or to the Ledger. However, you any balancing segment value tied to Ledger cannot be used in OU dependant transaction (AR, AP, etc.) – DON’T Assign the company value to the Ledger if you want to use it for the OU transactions. See next screen. - You can assign multiple Balancing Segment values per legal entity. Then security rules are needed to restrict access (if required). - You cannot associate the balancing segment value to the LE and then again to any ledger. This is assignment is done automatically through the LE. NorCal GEO Training Day January Copyright Celantra Systems

Step 4: continued Assign Multiple Legal Entities to single Ledger, The operating unit option is “hidden” in the ledger setup menu. NorCal GEO Training Day January Copyright Celantra Systems

Step 4: continued Create and Assign Operating Units assigned to a Legal Entity Click “Add Operating Unit” on the previous screen. Here you add the OU and assign it to a business group. This the first time that Business Group is connected to Ledger and Legal Entity. In 11I Business Group is assigned at the Legal Entity level. You choose the Legal Entity by choosing the “Legal Context” field. NorCal GEO Training Day January Copyright Celantra Systems

Step 4: continued Assign Operating Units assigned to a Legal Entity You choose the Legal Entity by choosing the “Legal Context” field. You can see the legal entity name when searching “by”. NorCal GEO Training Day January Copyright Celantra Systems

Step 4: continued View the result – Operating Unit and Legal Entity are associated NorCal GEO Training Day January Copyright Celantra Systems

Step 4: continued Multiple Balancing Segment values at Ledger Level NorCal GEO Training Day January Copyright Celantra Systems

Section 3 Gotchas NorCal GEO Training Day January Copyright Celantra Systems

Gotcha 1: Location Addresses” or “Locations” – Terminology and challenges in visibility of data from both angles Java and Web-Form “ Addresses ” or “ Locations ” – Terminology Visibility of data from both angles Java and Web-Form NorCal GEO Training Day January Copyright Celantra Systems

R12 Gotcha Locations – Addresses Topic 1 – visibility from both angles Java and Web-Form We entered 12 locations into R12; From the Java form we can see all 12, from Web-Form we can see only 4 Big problem and confusion Java Form = 12 Locations NorCal GEO Training Day January Copyright Celantra Systems

Web Form = 4 Locations NorCal GEO Training Day January Copyright Celantra Systems

Other Observations on Locations and Addresses No easy way to see table used in Web-Form - No easy way to see total number of records in Web-Form - Locations are not consistently visible across Java and Web Forms. We are not sure what it depends on. Possibly I can see in Web form only those that have been entered in Web-Form. In Java I can see all. Possible strategy is to enter what you can in Web-Form, especially locations, organizations. - Locations in Java and 11I are called Addresses in Web-Form of 12 NorCal GEO Training Day January Copyright Celantra Systems

Gotcha 2: Location with Address Validation Business Group Needs Location (HR_Location): Address Validation Data entry through Java form or Web-form? Address default United States – will cause validation (if site profile option is set for HR purpose) NorCal GEO Training Day January Copyright Celantra Systems

Address Validation default Address format NorCal GEO Training Day January Copyright Celantra Systems

Select different Address formats NorCal GEO Training Day January Copyright Celantra Systems

Change address style to United States International – then there is no validation. For each address you select the address style separately. For locations that are used for tax calculation we may need to change the address style to United States. This makes City, County, State mandatory and validates City, County, State relationship with Zip Code. (not sure if it goes not address level). Need to load patch with address validations (maybe we should find the patch no.). US Validated Format or International Format: yes/no?

International Format No validation NorCal GEO Training Day January Copyright Celantra Systems

Thank you ! Hans Kolbe, Celantra Systems + 1 (415) 730 – 1131 Stafford Warren (408) NorCal GEO Training Day January Copyright Celantra Systems