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Chapter 2: Implementing Oracle Financials-Essential Concepts
Financials in the Global Businesses Environment
Hardware and network configurations can be complex. A large multinational organization with several operating units has finance users in many countries around the world. The corporation has a choice: either to run one centralized server and link all users by high-speed data connections (cal led a wide area network, or WAN) or to instal I smaller machines in each operating unit and connect the users by a local area network (LAN). Each option should be costed, because there is a trade-off between network communication cost (which is higher for a centralized server) and machine cost (which is lower for a centralized server). The hardware strategy has a subtle and pervasive impact on the software features that can be delivered readily to each user. Centralized servers are excellent for allowing regular and fast consolidation of financial data to produce group-wide accounts. In addition, a centralized server allows simplified creation of a common chart of accounts and common categories and classifications for all users. By contrast, local servers allow independent operating units a great deal of autonomy to run their business the way that suits them. Businesses have to adapt the hardware strategy to their corporate culture. However, local independence may be seen as a bad business practice because it can degrade the data being uploaded to corporate reporting systems.
The hardware configuration and the implementation of organizational structure are subtly related. The strategy for each should be chosen together, after you have fully researched thestructure and needs of your business.
Creating a Model of Your Business
Before you implement Oracle Financials, model your entire business and determine your actual organizational structures. How many legal entities do you own? Where are your warehouses and manufacturing plants located? Are the finance, marketing, and personnel departments run at the group level, or by each business unit individually? Determine your reporting needs, as well as the levels of autonomy in your business. Keep in mind that reporting hierarchies may not match physical locations. The marketing manager for Asia and the Pacific, for example, might operate out of group headquarters in New York. The global effort can be broken down into smaller manageable chunks. A large multinational company, then, might choose to implement Oracle Applications in one business unit as a prototype, then later roll out the system to its other units.
Prototyping
The prototype may be a full implementation in a single business unit, or it may be a pilot implementation. Pilots can be implemented rapidly and used to validate new business processes and procedures. They allow managers, accountants, and implementers to build up confidence and understand how Oracle Applications works. From the start, the analysis of the business should consider all business units. All critical decisions about hardware distribution, organization, the structure of a chart of accounts, and other setup issues must suit the entire organization. Otherwise, limiting choices are made to fit the requirements of the prototype business unit, which severely hampers future implementations in other business units.
The final decisions about the hardware configuration and about organizational structure cannot be made independently of each other; both areas have to be considered together. The configuration is not determined by the size of your organization, but rather the complexity of your organization, its geographical spread, the level of autonomy that different parts of your organization have, and the similarity between their lines of business.
The Modeling Process
The modeling process can be likened to a process of mapping your actual organizational structure onto the implied organizational model of logical databases, each database catering to multiple organizations, and each organization consisting of multiple legal entities. If you are converting to Oracle Applications from an existing or legacy system, do not make the mistake of simply reimplementing your existing model.
Start the modeling process at the database level. Determine how many databases are needed to support your business. You can then model upward to decide how many servers are needed and which database instances will reside on each server. For each database instance you can model downward to determine the organizational structure implemented within each database.
Financial Reporting
The Accounting Flexfield segments support statutory and management reporting from the General Ledger (GL). There has to be a corporate-wide plan for financial reporting. Reporting needs that are not covered by a segment in the Accounting Flexfield have to be satisfied by a report from one of the other modules, or from a feeder system if the data is imported directly into Oracle General Ledger.
Each module provides several reports, each one detailing a specific type of financial transaction data. These standard reports can be requested by an authorized user at any time. Standard reports have a fixed format and layout, but their content can be focused each time the report is submitted by specifying selection parameters. The standard reports in Oracle General Ledger include Trial Balance reports, several Account Analysis reports, and Consolidation and Budgeting reports.
In addition to the standard reports, three other tools are associated with Oracle General Ledger for reporting financial data in a way that exceeds the intention of the standard reports.
The Financial Statement Generator (FSG) can be used for producing any financial report, such as a balance sheet or income statement. The FSG reports on account balance, either actual or budget, per Accounting Flexfield combination. It does not report on transaction detail. Refer to Chapter 3 for more information on defining FSG report formats.
Oracle Financial Analyzer is a separate module, with an OLAP multidimensional database at its core, which is used to produce complex analysis reports. Transaction data is exported out of Oracle General Ledger and imported into Oracle Financial Analyzer. It provides a complete set of tools for budgeting, forecasting, analyzing, and reporting corporate financial data.
The Application Desktop Integrator started life as a quick and simple way to import budgets and actual journals in Oracle General Ledger. It now includes the Request Center, a centralized report management tool from which you can submit, monitor, and publish any type of report to a variety of different formats-Web, spreadsheet, and text -all from a single user interface. Not only does the Request Center support publish-and-subscribe Web publishing, but it also allows you to download a spreadsheet version of the report-on-demand for analytical analysis....