ORACLE E-BUSINESS SUITE IN A NUTSHELL

With a fast approaching end of support for Release 11i[1], upgrading to the latest version of the E-Business Suite is a heightened concern for top executives.  Industry estimates indicate that R11i customers represent about 61% of Oracle’s installed base.  The importance of key changes and the potential impacts of adopting Oracle’s latest version ‘Release 12’[2] may not be widely understood.  With this mature ERP platform, adopting industry best practices and the right balance of project resources to implement them, top executives can achieve their return on investment goals faster, avoid associated risks and create a platform for efficiency and business growth.  This document outlines a few key points for consideration.

Oracle’s E-Business Suite R12 offering, which was introduced in 2007 achieved platform stability in 2009.  R12 has evolved into a stable platform with demonstrated gains in functionality, tighter integration between product modules and enhanced support for shared services.  The R12 architecture is a required upgrade for Oracle’s emerging next generation platform named Fusion.  For R11i clients, the time for implementing R12 is now.

The extended support program for R11i ends on November 30, 2013.  Businesses that have outgrown their initial R11i deployment may wish to introduce R12 for many reasons: taking the opportunity to set things right from a previous implementation, defragmenting inefficient processes resulting from new business ventures, M&A additions or divestitures or achieving compliance with regulatory changes and enabling multi GAAP reporting.  Companies proceeding on an unsupported basis, with time, will be exposed to increasing levels of risks and costs.  Operating without support for potential security breaches, lack of updates (for tax, legal or regulatory changes) and inoperability issues with new software and web browsers can stretch IT budgets and attract auditor scrutiny (and additional audit fees).  A do nothing approach can end up being a do a lot approach.

Under the Hood  With over 300 new features in R12, there is no shortage of options.  Significant changes are evident in the financial modules for global and shared services operations, as are improvements within many other modules, including strategic sourcing, supply chain, talent management and business analytics.  Major enhancements include the following:

– A fundamental change in the General Ledger and a new Sub Ledger Accounting architecture allows for consistent accounting rules for all transactions and introduces parallel reporting between GAAP systems and IFRS[3].

– Unified Bank Model enables centralized and logical administration of bank accounts.

– With the E-Business Tax Engine, transaction taxes are consistently managed and processed across the enterprise with an ability to control complex tax requirements.

– Payments are centrally disbursed and automated with a more streamlined integration with external banks.

– Inter Company Accounting is centrally defined with improved reporting for period end reconciliation.

– With Multiple Organization Access Control, users can gain access to data from multiple units (incl. setup screens) without having to switch responsibilities.

– BI Publisher supports authoring, managing and delivering formatted documents; report layouts can be designed using desktop tools, such as MS Office or Adobe Acrobat.

Technical Upgrade  A technical upgrade is appropriate for companies that do not anticipate changes to business processes and
structures and are satisfied with existing customizations.  A technical upgrade can be done quickly, in most cases, with a moderate investment since fewer resources are required to complete a straightforward upgrade.  For some companies, technical challenges may exist with updating the database and converting the financial modules, especially configuring the sub ledger architecture and the E-business tax engine.

Technical & Functional Upgrade  A technical and functional upgrade is somewhat similar to the technical upgrade but allows for the addition of new modules or process improvements that are vital for conducting business operations.  This approach may be suitable for companies that are preparing for a future expansion and need to modernize and centralize key processes such as the procure-to-pay cycle or the order-to-cash cycle or to retire legacy systems.

Re-Implementation  When significant changes are anticipated in how business is done (often fundamental changes that are precursors to pursuing new business opportunities), a fresh R12 implementation has the potential of delivering the biggest value.  The assumption of course is that the re implementation is performed in close collaboration among IT, operations and finance.  For example, companies with an international reach can establish an enterprise infrastructure that allows for a single software instance, general ledgers with unified global chart of accounts, and an efficient financial consolidation process.  Additionally, standardizing key processes across divisions and establishing a flexible and scalable enterprise platform can pave the way for growing or acquiring new divisions while achieving significant process savings.  Standardizing certain key process that generate the biggest impact, if done right, can support the strategic endgame[4].  Depending on the nature and scale, re implementations can be significant undertakings and take months or even a year or two for completion.

Risks  According to a survey completed by Oracle R12 users[5], top risks associated with R12 migrations singled out limited staff availability for assisting with the project and insufficient testing prior to the go-live date.  Other responses included system down time, integration issues with legacy systems, inconsistencies with software patches applied and, last but not least, end user acceptance of the new system.  An area of concern was an ability to carry forward customizations, where R12’s resident functionality were either insufficient or too costly to implement.

Conclusion  An ERP introduction is a specialized and infrequent activity – an endeavor that is fraught with numerous decisions.  Whether a technical upgrade, a functional upgrade or a re implementation is the chosen path, adding specific R12 product knowledge, insights and experience can help clients avoid project spin.  By gaining a deep understanding of your key business drivers throughout your enterprise and what success means to you, we can help establish specific metrics for measuring the impact and benefits of this initiative.

Operating in a gently strengthening economic recovery, top executives are beginning to turn to growth opportunities for sales, market share and profits.  This in turn is intensifying the competition for project funding within companies.  Despite R12’s strong product virtues, executive level sponsorship and funding will hinge on how well business needs are mapped to R12’s functionality, how realistic the project plan is and what metrics and mechanisms are set to measure and deliver the promised return on investment.  Regardless of how the R12 is introduced, success is assured when the migration is handled as a change management process with a clear focus on achieving overriding business needs and engaging and preparing employees for the transition.  By carefully planning, communicating and helping to create successful project outcomes, we can help you build a robust and scalable ERP platform for achieving increased productivity and transformational growth.

Pradeep Shakespeare is a financial reporting and systems consultant with over 15 years of achievements in financial accounting, reporting, technology introduction and managing organizational change.  He also helped deliver IFRS and SOx compliance, enterprise resource planning (ERP) systems and improved key operational processes.  Through effective collaboration among various stakeholders, he negotiated significant SG&A expense reductions and contributed to profit improvement.  Pradeep is a Chartered Management Accountant (England), Chartered Global Management Accountant and an executive MBA.  He can be contacted at +1.905.609.4105 or via email: pshakespeare@solutionsthink.com.

© 2013 Solutionsthink Consultants Inc.  All rights reserved.

End Notes

[1] R11i refers to Oracle E-Business Suite Release 11.5.10

[2] R12 refers to Oracle E-Business Suite Release 12.1.3 and the future Release 12.2.

[3] Publicly accountable entities in over 100 countries are required to report under International Financial Reporting Standards (IFRS).

[4] The relative merits of standardization and preserving unique processes are discussed in E. Benni, K. Muto, and K. W. Wang Tailoring IT to global operations [McKinsey Quarterly, November 2011].

[5] ERP Upgrades: What’s Your Philosophy?  2012 OUAG Survey on Enterprise Application/ ERP Suite upgrade strategies’ [OUAG Research Line, February 2012].

E-BUSINESS SUITE ERP ORACLE PROJECT MANAGEMENT R12