The Tale of Two Cities: A Global Implementation of Oracle 12.2.3

1. The Tale of Two Cities: A Global Implementation of Oracle 12.2.3 Session ID#: Prepared by: Paul Kirch, FusionCloud Consulting

2. Oracle Open World – Recommended Sessions

3. Paul Kirch, Principal • Experience: • Director, Oracle EBS and Fusion Practice at large India-based Integrator • Developed proposals and led practice for India-based system integrator. Responsibilities included creating artifacts for project delivery methodology, creating implementation methodology for Fusion project and hiring staff into the Fusion Practice. Successful in selling Fusion projects to 1 regional restaurant chain and to a government national lab. • Client: Major High End Clothing Retailer | Role: Program/ Project Manager • Led a 12 month Oracle R12 Assessment and Implementation project in which project team assessed the impact of migrating over 400 custom objects to Oracle R12 (12.1.6). Project scope included Oracle R12 functional and technical upgrade and reimplementation of Oracle Projects modules (Project billing, costing, management modules) Project solution included Oracle STT eB Tax solution, Oracle Procurement, iSupplier, HR/ Payroll and OIC. Project value: $4.2 million. • Client: Major Games Software Development Company| Role: Financials & Tax Lead • Led a Order to Cash (OTC) project team tasked with implementing Oracle SOA Suite of products as part of an Oracle R12 (12.1.6) upgrade project. Team reversed engineered a number of major modifications created during the Oracle 11.5.10 implementation, using Oracle SLA, Ledger/Ledger Sets, and eB Tax to replace customizations with standard “out of the box” functionality. Project team size: 25 consultants. Project scope: Worldwide, including Asia Pacific and Europe. • Client: Major Construction Company (Brazil & U.S)| Role: AP Lead and U.S Tax SME • Led a project team engaged in the United States implementation of Oracle R12 (12.1.4). Project scope included: Oracle Financials, including Oracle eB Tax (Sales & Use Tax), Supply Chain, HR and PeopleSoft Payroll. Project team developed a template to allow company to implement a global sourcing/ procurement company for Brazilian-based construction project teams. Summary: Paul is a senior program manager with over 25 years experience managing programs, with 10+ years delivering large complex global business transformation projects. Paul has worked on and/or delivered 17+ Oracle full life cycle implementations, and has extensive international experience working in Asia, Europe, South America, the Middle East, and other principal countries. In addition to his package and cloud-based implementation experience, Paul has also led ERP-vendor selection programs, business process reengineering/ transformation programs, business case development , and supply chain effectiveness initiatives. Paul has led programs utilizing Oracle Financials, Supply Chain, HR/Payroll and Projects modules in all releases from Oracle 9.4.2 through Oracle R.12.2.3 and Fusion Release 9. Paul lives in San Francisco, California and is currently working in the San Francisco area on a global implementation project. 3

4. Introduction • FusionCloudConsulting • Inflection Point • Offering Overview • FusionCloud Consulting • Methodology and Deliverables • Website • LinkedIn Page • “A Tale of Two Cities”

5. FusionCloud Consulting 5

6. The Public Cloud Public clouds are owned and operated by third-party service providers. Customers benefit from economies of scale because infrastructure costs are spread across all users, thus allowing each individual client to operate on a low-cost, “pay-as-you-go” model. Public cloud infrastructure is typically larger in scale than an in-house enterprise cloud, which provides clients with seamless, on-demand scalability. Customers on public clouds share the same infrastructure pool with limited configurations, security protections and availability variances, as these factors are wholly managed and supported by the service provider.

7. On-Premise Private Cloud: The on-premise, private cloud is an “internal cloud” where applications are hosted in the organization’s own data center. An on-premise private cloud provides standardized processes and protection, but is limited in size and scalability. The firm continues to incur the capital and operational costs associated with the physical infrastructure, but contracts out patch application and day-to-day management of the data base and applications to a 3rd party services provider. Externally-Hosted Private Cloud: The externally-hosted private cloud model is a ERP application managed by an external cloud computing services provider on infrastructure or equipment physically located outside of the enterprise walls. The service provider facilitates an exclusive cloud environment using multi-tenant security features on fully dedicated or shared servers. The Private Cloud

8. ERP Software is at an Inflection Point 2020? Widespread adoption of ERP as a SAS offering on “the cloud” 2011 Emergence of ERP SAS offerings 1999 Widespread adoption of the internet 1995 Development of ERP Software

9. The Market Forrester Research

10. Forrester Research

11. Offering Overview Tech Func Consulting • Consulting • Management • Functional • Technical • Training • On-site • On-line • Mobile • Staff Augmentation Training Staffing

12. FusionCloud Consulting • Oracle R12 “Globalization in a Box” offering: • Oracle global implementation consulting, including: • Intercompany transactions for global implementations • Worldwide tax configuration and testing • Oracle Fusion Applications offering: • Oracle Fusion Cloud or On-premise Applications • Cloud Strategy Consulting (i.e. Which vendor?) • Oracle Fusion Cloud or On-premise Implementation Consulting • Workday Applications offering: • Workday (Cloud) Applications • Workday to Oracle R12 Integration Consulting (HR/Payroll) • Workday Financials Implementation Consulting

13. Methodology and Deliverables Analyze & Prepare Fit/Gap & “Imagine” Configure Deploy & Train Support Methodology 1 2 3 4 5 Rapid prototyping, data extraction and load, process re-design Configuration using “best practices” configuration and templates Development of company specific training materials and process documentation On-shore and off-shore support and maintenance Questionnaires and pre-prepared workshop materials Deliverables • Questionnaire • Presentation • Process Design • Data Load Scripts • Initial Configuration • Final Process Flows • BR100 • Loaded Data • Training Materials • Detailed Process Docs • Test Procedures • Test Cases • Test Results • Support Procedures • Management/ Admin

14. Fusion Applications • Human Resources • Identify Management • Human Resources • Payroll • Financials • General Ledger • Receivables • Payables • Fixed Assets • Intercompany • Projects

15. Fusion Applications Implementation and Project Management • Implementation: access to the most experienced Oracle Fusion Applications talent available • Project Management: seasoned management team with individual experience of 25+ years in Oracle, and 15+ years managing Oracle projects

16. Cloud Consulting Strategy

17. Website

18. LinkedIn Page

20. AgendaA Tale of Two Cities • Project Overview • Multi-Org Concepts • Intercompany • Conceptual Understanding • Introduction to eB Tax 20

21. Project Overview 21

22. Project Overview • The R12 project envisioned re-implementing Oracle R12, rather than performing a technical upgrade. The driver behind this decision was that the Oracle 11i environment was heavily customized and did not take advantage of Oracle’s features. • This said, the R12 project’s stated goals were to: • Globalize • Standardize • Simplify • The “Two Cities” in the presentation title are: • Newark, California • Cork, Ireland

23. Representation from EMEA, China, and the Americas managed by first by IBM and, later, by in-house Program Management Office (PMO) Project scope: redesign of the multi-org structure taking full advantage of Oracle R12 functionality and incorporating the use of Secondary Ledgers for IFRS reporting and HFM upload Project team engaged in redesign of intercompany processes used to move materials between the manufacturing organization based in China and the distribution centers based in the major markets around the world Project includes migration to a single global banking partner. Project envisions integration with Oracle Web Center for AP invoice capture and imaging functionality. Project is slated for completion in April, 2015 on Oracle 12.2.3. This will be one of the first projects to go live on the latest release of Oracle. Project modules in scope included: GL, AGIS, Oracle eB Tax, Oracle Payables, Oracle Purchasing and iProcurement, iSupplier, Oracle Advanced Supply Chain, Oracle Advanced Planning, Oracle Order Management, Oracle Receivables, among others Project Organization and Scope

24. Multi-Org Concepts 24

25. Ledgers and Ledger Sets Company Codes/ Balancing Segment Values (BSVs) Legal Entities Business Group Operating Units Inventory Org Multi-Org Concepts

26. In Oracle R12, Oracle introduces the concept of a Legal Entity in Oracle General Ledger. The Legal Entity or Establishment captures the VAT Registration Number and creates a legal address Oracle uses company codes or Balancing Segment Values (BSV’s) to define the level at which debits=credits in Oracle General Ledger. At the subledger level, Oracle uses the concept of Operating Units to define separate business units The Legal Entity can be used to “lock down” BSV’s. This functionality is extremely important in Oracle eB Tax in determining the appropriate rates to use on a specific transaction (place of supply) Inter-company transactions are defined as transactions between related-company legal entities; Intra-company transactions are transactions between BSVs that belong to the same legal entity Intercompany transactions need to be understood from a transaction processing, tax compliance, and accounting perspective Definition of Terms

27. EMEA Ledger Set IFRS EUR IFRS EUR Europe USD EUROPE EUR 4517 4559 4605 9923 4314 442 4226 493 4326 423 4248 4269 4279 4288 4373 4348 4388 482 450 458 9997 4898 9999 8880 444 429 4568 4849 1 2 3 4 5 6 7 8 FR IT UK DE ES IR Nordic IT2 NOK NL RU PL FI UAE HRV TR SA EU OPS 1 2 3 4 5 6 I J K A E G L M N O B F Primary Ledger C Secondary Ledgers IFRS D Russia RUB EUROPE EUR Legal Entity/BSV’s 494 RU OU- Manufacturing 4920 4910 4957 RO GR Ukraine OU- Distribution RU OU- Sales Global Inventory INV H HQ Company Inventory Org

28. Intercompany Transactions in R12 28

29. Operating Unit Intercompany Functionality: Oracle’s Operating Unit is designed to hold an operational entity and its transactions separate from others OU's. In order for Oracle’s Shipping Networks/ Intercompany Transaction Flows to work correctly, two operating units must be defined which transact with one another. Oracle uses the two operating units structure to enable intercompany transactions for OM, INV, PA , AR, and AP transactions. Balancing Segment Intercompany Functionality: The GL Balancing Segment is designed to maintain an entity’s financial information. With its automatic balancing of I/C journals Oracle’s GL module provides I/C functionality that is independent of the OU concept, described above. AGIS Intercompany Functionality: In Oracle R12, Oracle’s AGIS extends the GIS functionality created in 11i and allows users to create intercompany transactions, including the underlying I/C AR/AP invoices. The relationship and entries between Initiator and Recipient in AGIS define which entities can transact and create intercompany AR/AP transactions, and whether these transactions require approval. Intercompany Overview

30. European Intercompany #1 Internal SO/IR Ship From (EU Registration) #2 Material 0% VAT – Manufacturing Export Asia Europe # 3 Interco AR/AP (0% markup, No VAT) HQ Country Registration/ No VAT #4 Material #4 AR Reseller/ Distributor Bill From HQ Ship To (Registered/ Non Registered) ** Reseller in Netherlands, then NETH 21%. Other member state, VAT Registration, etc. Import from CNY NETH Offset VAT of 21% #3 Interco AR/AP

31. Supported Transactions flows: (from Oracle White Paper) Internal Drop-Ship (older functionality – 10.7) External Drop-Ship (released in 11.5.3) Standard Single Hop Inter-company (11.5.9) Global Purchase Agreements (GPA) (11.5.10) Global Intercompany/ Advanced Intercompany System (GIS/AGIS) Double Hop Inter-company (not supported in Oracle R12) History of Intercompany in Oracle

32. Conceptual Understanding 32

33. Drop Ship Customer Bill-to Ship-to Shipment Sale and Invoice Entity A Selling Entity Entity B Shipping Entity IC Invoice INV-Org B INV-Org A OM: Pick Release, Ship-Confirm, Inv Interface, Costing OM: Book Sales Order - Reserve with Ship-From Warehouse of Inv Org B AR: Create IC Invoice To Entity A AR: Trade Invoice To Customer AP: Create IC AP Invoice from Entity B

34. Single Node Intercompany Customer Bill-to Ship-to Sale and Invoice – not directly related Entity B Shipping Entity A “Selling Entity” Shipment and IC Invoice INV-Org B INV-Org A OM: Import Internal Sales Order OM: Reserve, Pick Release, Ship-Confirm, Inv Interface, Costing PO: Internal Requisition PO: Create Internal Order AP: Create IC AP Invoice from Entity B AR: Create IC Invoice To Entity A

35. Global Purchase Agreement (Centralized Procurement) Supplier PO Pay Receive Purchase Order, Ship to Entity B “Procuring” Shipment Entity A “GPA Entity” INV-Org B INV-Org A PO: Create Requisition PO: Purchase Order (Auto) Requisition for Item On GPA AR: Create IC Invoice To Entity A AP: Create IC AP Invoice from Entity B Entity C “Accounting” Intercompany AR INV-Org C INV: Create Intercompany AR INV: Create Intercompany AP INV: Create Intercompany AP AP: Create IC Invoice To Entity A AR: Create IC Invoice to Entity B

36. Multiple Hop Intercompany Customer Bill-to Ship-to Not directly related to transaction Entity B “Procuring” Shipment Entity A “Selling Entity” INV-Org B INV-Org A PO: Create Internal Requisition PO: Create Internal Order OM: Import Internal Order Pick, Pack and Ship IR/ISO AR: Create IC Invoice To Entity C AP: Create IC AP Invoice from Entity C Entity C “Accounting” Intercompany AR Intercompany AP INV-Org C INV: Create Intercompany AR INV: Create Intercompany AP INV: Create AP: Create IC Invoice To Entity A AR: Create IC Invoice to Entity B

37. Global Tax 37

38. Why is eB Tax Important? Oracle’s Stated Direction: Oracle plans to eliminate tax integration with 3rd party tax-rules engines such as Sabrix, Taxware and Vertex. With Oracle Fusion, Oracle will not support 3rd party tax rules integration, though the upload of content (e.g. tax rates) will still be possible. Integration: Oracle eB Tax is tightly integrated with Accounts Payable, as well as Oracle Accounts Receivable, Order Management, Purchasing and Oracle Channel Revenue Management modules. By using Oracle eB Tax, companies eliminate the need to develop or implement integration to the 3rd party tax rules engine. Fusion: Oracle eB Tax is one of the few modules that remains virtually unchanged in Oracle Fusion. (The other modules) are the Payments Engine and the Supplier Master in Oracle AP and Multi-Org in GL, which is mostly configuration and not necessarily a module.) With Fusion, Oracle has built an enhancement that will allow for the creation of tax regimes, rates and rules in a spreadsheet for automated upload.

39. Oracle AP Integration with eB Tax

40. Tax Rules Planning Spreadsheet

41. Tax Reporting

42. Conclusion 42

43. Oracle Desupport Dates ** 11.5.10 desupport notice from Metalink, (Doc ID 806593.1)

44. The basic questions for companies that are on Oracle (11.5.10 or R12) are:Do we upgrade to Oracle R12.1.3 or do we go for Fusion?Should we develop a “cloud” strategy?What are our options? E-mail: paul_kirch@yahoo.com Cell Phone: 408-316-5899

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46. Appendix