Oracle Financials Strategy

Last week I was sitting outside, enjoying the sunshine and having lunch with friends after a three hour morning meeting. We began to talk about our careers – where we’d been and what we’d done. My friend, an excellent student and trained public accounting guru, shared about why she’d left the Finance team and moved into Development.

“We worked such incredibly long hours, often through the night, to close the books for quarterly earnings. Sometimes I’d sleep under my desk so I could be available to work on my reconciliations and cost center allocations once the numbers were ready.” She explained that the period close process is a chain of events with different teams of people involved at different points in the chain, so sometimes “I’d wait around for hours for my turn, unsure of when I might be able to start my close activities.”

As I listened I was reminded of several articles that I’d recently read about improved productivity and retention that Best Buy experienced by implementing a radical new approach to work – Results Only Work Environments (ROWE).

According to Cali Ressler and Jody Thompson, the founders of this new movement and authors of the book, Why Works Sucks and How to Fix It, ROWE is not a modified work schedule, it’s not flex-time, shortened work weeks or any of the myriad of attempts to provide employees more work-life balance. “In a Results Only Work Environment (ROWE), people get to do whatever they want, whenever they want as long as the work gets done. “ Sounds too good to be true I thought, but does it work?

“Right now, there are two authentic ROWEs: Fortune 100 retailer Best Buy Co., Inc. and brokerage firm J.A. Counter & Associates in New Richmond, WI. Both firms have embraced technology in ways that allow them to maximize productivity (up an average of 41% on Best Buy teams) while also giving people control over their lives.”

What a concept! It sounded reasonable for groups like Sales or even Marketing to implement an innovative workplace program like ROWE, but would it work for groups like Finance? Would it be possible for employees completing back-office functions to close their books in 3-5 days and still “have control over their lives”?

--Benjamin Franklin, in a letter to M. Leroy, 1789.

But the only similarity that can be found between taxes and death is that none are voluntary. Everything else in tax is considerably more regulated.

Taxation systems are not an invention of the modern world. In fact, they have been around for many centuries:

Before civilization had coined-money, taxes were paid to the authorities in different forms: delivering labour services, giving animals, fighting wars, etc. Taxes applied to almost everything: property, movement of goods, livestock, and other forms of economic activities at the time. Failure to pay the due taxes resulted in severe penalties. Nonetheless, there were multiple ways of easing the tax burden: tax contributors could nominate their own substitutes for rendering services or go to war on their behalf, and they could equally apply for exemptions and exceptions.

If we transpose the relative simplicity of taxation in the ancient world to the complexity of today�s global business environment, it becomes obvious that enterprises need to support their taxation requirements (within and across geographies) with powerful and reliable tools.

If you are a user of financial applications, in the role of a tax manager or as a business user, you often are exposed to the taxation aspects of the business you work in.

And Oracle has good news for tax managers: with Release 12, Oracle has delivered E-Business Tax that is a central tax engine where you define, simulate and action all legal regulations for tax treatment, across geographies and across business cycles (Procure-To-Pay and Order-To-Cash). To help you start the configuration of your tax regulations, you can use the seeded tax configuration library with sample tax data for dozens of countries, or choose to rely on a tax provider to seed that tax configuration for you.

Oracle has even better news for non tax users: E-Business Tax allied with the expertise of the tax manager, allows you not to worry about taxes in business transactions. You just carry on with your daily work and tax will be there for you, promptly and accurately.

More information on:
Oracle E-Business Tax Documentation Resources, Release 12 (Metalink note 397158.1)

Often on Sunday evenings my thoughts drift to "what can I wear tomorrow?" while I'm preparing dinner or driving home after a great time with friends.  But this past weekend was a little different.  I was looking forward to getting up at 6am on Tuesday morning to gather with 6,000 other women in San Francisco's Moscone Center for the Professional Business Women in California conference.

 

Why rise at 6am?  Was it for the bagels, cream cheese and hot coffee?  Not!  Is it that fascinating to get up at oh-dark-thirty to take BART along with hundreds of other commuters into the City and meet with women?  Yes!   The opportunity to spend focused time with other women - listening, laughing, learning, living - is uplifting.  It's not what I eat, nor what I hear or even what I see.  It's what I feel - while I'm there and after I leave.

 

I feel hopeful as I listen to Heather Hopkins share how her mother's experience of growing up poor and ashamed of her clothing was the impetus for her non-profit, My New Red Shoes which provides homeless children in San Francisco clothing for their first day of school.  I feel encouraged as I meet Magatte Wade, a young Senegalese woman whose desire to preserve her heritage launched a beverage company, Adina, that competes with Starbucks for bottled coffee and tea market share.

 

I feel grateful as I listen to Cokie Roberts share about founding women like Abigail Adams who radically influenced politics and social change.  I feel proud as I listen to Madeline Albright's wit and humor as she shares about her experiences as our first female Secretary of State.

 

While Abigail Adams, Cokie Roberts and her mom, Linda Boggs, former Ambassador and Representative, as well as Madeline Albright have lived extraordinary lives, they are not unusual women.  Yes, they're bright, intelligent, articulate, courageous, determined and tenacious.  But that's a woman.  No matter what their education, socio-economic status, or nationality -women have consistently found creative solutions to the problems facing their children, their families, and their communities.  Being at the PBWC conference reinvigorates me with the enthusiasm, tenacity, and creativity to continue finding new ways to solve problems - for ourselves, our children, our families, our communities, our nation, our world.

 

Thanks to all the women at PBWC that nurture my feeling connected and affirmed.

Thanks to the joint Oracle and Marvel promotional campaign, Oracle HQ employees were treated to a private screening of the new "Iron Man" movie before its official release on May 2.

Now, I am not a comic book connoisseur but the movie kicks some serious body part. It's a perfect summer action flick - so run, not walk, to your nearest movie theater this Friday!

One can't help but wonder if, perhaps, Robert Downey Jr. based his Tony "Iron Man" Stark character on a certain other rock star billionaire who we all know and admire around here in Redwood Shores.

Daaa daaa da-da-da...

I'm sure that most of you use some sort of Instant Messaging or Chat application.  Personally, I have three.....AOL, Yahoo! and our internal Oracle one.  I use AOL & Yahoo! for friends (luckily, most of my friends use two or more, so I don't have to create and MSN account), and I use the Oracle app for co-workers. 

When I have a question for a co-worker, I usually just ping them via chat: 1-because I can multi-task and 2-for quick questions, it usually takes less time to get an answer than with email or phone (conversation often leads to digression). 

However, for customer and partner interactions, I (and most of us in our group) still use email  and conference calls.  I believe conversations with customers are more formal and usually requires more than one person at a time - while chat seems (true?) to be much more informal and is typically one-on-one.

Several consumer software sites offer chat support from their website as an option to call desk, and my question is does this apply to financial operations as well?  Would you want your collector to be able to IM a customer's payables clerk to answer a quick question regarding a past due invoice?  Would you allow your payables clerk to accept IM inquiries regarding payments and invoices from your suppliers?

I'm of two minds.  On one hand, it could be really quick to get an answer to your question, but on the other, it may become too disruptive for your staff to handle chats with all of your trading partners.  What are your thoughts?  Is B2B chat the future of financial operations, or will it distract from the goals of your finance department?

I was pleasantly surprised to see that SEC had a roundtable discussion on December 13th debating whether the domestic issuers in US should also be permitted to use IFRS in lieu of US GAAP � The SEC recently approved rule amendments permitting foreign private issuers in US to use IFRS standards instead of US GAAP. 

 

In his recent speech on Feb 8^th,2008, SEC Chairman Christopher Cox has promised �an updated roadmap that lays out a schedule, and appropriate milestones on which the schedule will be conditioned, for continuing the progress that the United States is making in moving to accept IFRS in this country.�

 

IFRS standards are mandated or permitted in over 100 countries across the world. So, this seems a logical next-step in adoption of global accounting standards in US � I know a lot of multinational Oracle customers are currently reporting in US GAAP and IFRS today � and, am aware of the challenges that they face on a day-to-day basis. This move, if and when it happens, might go to alleviate the overhead associated with reporting in two differing standards.

 

The perspective expressed in this blog entry is not of Oracle nor its Management, nor of all it�s developers that stand to gain by the way of fixing the bugs associated with differing Accounting standards.

 

I chuckled the first time a customer asked me, "Do I have to take SLA?" because it seemed like she was equating Subledger Accounting (SLA) with bad-tasting medicine. In fact, we like to think of SLA more as a new miracle drug.  I can understand why some people might initially be scared of SLA because it's new, and like many other drugs, not widely accepted as a cure.

SLA is the new Financials module that centralizes accounting for the entire E-Business suite (and yes, you have to take it, to get your accounting).  Customers have never had such flexibility of configuring their accounting rules before, let alone ensuring their foreign accounting offices are following their corporate accounting policy.  Once a customer grasps the business benefits of SLA, their eyes usually light up and they start asking more optimistic questions, "I have IAD, can you backport it?"

If you're just starting to learn about IAD and this new drug, SLA, you should start by reviewing the Business Benefits of Oracle Subledger Accounting whitepaper.

For those who are ready to undergo a trial treatment program, get a hold of a Release12 EBS installation and take a look at the accounting rules that EBS delivers out of the box.  These rules are configured to perform accounting exactly the same way as in Release 11i EBS (to ensure no adverse side effects), so the rules should look familiar.  If your R12 EBS installation has upgraded data or the Vision demo data in it, just go to the setup for a ledger like Vision Corporation and select the Open Subledger Accounting Method button.  That will take you to the setup pages to view the journal definitions and accounting rules for that ledger.

When you're ready to start longterm treatment and define your own accounting rules, don't try to reinvent the wheel - simply make a copy of the accounting rules delivered out of the box, and make changes to this copy.  Copying rules is fully supported and highly encouraged.  And keep the SLA implementation guide handy for more detailed instruction.

Incorrect Accounting Disorder is treatable, call your local sales rep and ask if SLA might be right for you.

We get asked frequently about balancing segment values (BSVs), and we have definitely seen some cases of BSVs being...well...misused.

In short, the intention of balancing segments were to identify an entity that should produce a balance sheet or statement of financial position. According to FASB,

• Financial position, as it is reflected by the records and accounts
  from which the statement is prepared, is revealed in a presentation
  of the assets and liabilities of the entity.

• And an entity is defined as: Any legal structure used to conduct activities
  or to hold assets. Some examples of such structures are corporations,
  partnerships, limited liability companies, grantor trusts, and other
  trusts.

While this should seem pretty straightforward, the term "legal" used in the definition of entity always seems to lead to confusion.  Granted, you must produce a balance sheet for your legal entities, but many of our customers wish to produce balance sheets for sub-legal entities as well.    By sub-legal entity, I mean simply a portion of the legal entity.  This sub-legal entity could be a division, a department, a plant, or any other segment of the business.  In order to keep your accounting pristine, this sub-legal entity should always roll-up to a single legal entity.

So determining your balancing segment values is pretty simple:

I've seen some creative implementations in my time, and these implementations have definitely resulted in some creative heartaches.  The best advice that I can give is to just keep it simple and try to avoid those "if's" and "but's" that will inevitably lead you to one of those creative implementations or heartaches.

This entry is a continuation of my quest for understanding and knowledge of the hot topics in the Payments arena as a new Strategist for that module.  Please see the first part below:  A Primer on SEPA.

 

Why is SEPA important?

SEPA�s adoption means fewer charges on transactions and purchases in euros. On the consumer side of things, it could mean you'll be able to buy things on your card in another European country and pay nothing more than you would domestically. On the business side, it'll mean the same thing - moving money around should be as cheap as it is domestically. A more competitive and innovative euro retail payments market will bring with it higher service levels, more efficient products and cheaper alternatives for making payments. Banks will have to sharpen up their IT systems to replace manual processes with automatic ones in order to bring down costs � all good for corporates as well as consumers.

 

Do I care if I don�t do business in Europe?

YES!  No matter where you do business on the globe, standardization of retail payments is a goal to aspire to.  Making payments inefficiently is an avoidable drain on organizational resources. Transactions within the SEPA regime will be based upon the ISO20022 payment message � a global payment standard that will be made widely available on an �out-of the-box� basis by most (if not all) major software vendors.  You don�t have to go global to benefit from SEPA � but you can gain efficiencies and save on payment processing costs by adopting the global payment standard upon which it is based.

 

Helpful links:

SEPA Compliance (EBA)

SWIFT Community

The Road to the Single European Payments Area (Die Bank)

As a relatively green Strategist for the Fusion Payments module, I've started a knowledge quest of sorts to get myself quickly up to speed on relevent topics.  In meetings with my new development team, SEPA comes up frequently.  So, I've done a little research and I thought I'd pass on a quick summary of my findings

 

What is SEPA?

SEPA stands for Single European Payments Area and it is an area in which consumers, companies and other economic actors will be able to make and receive payments in euros, whether between or within national boundaries under the same basic conditions, rights and obligations, regardless of their location.  It is comprised of:

 

• a single currency
  
• a single set of euro payment instruments - credit transfers, direct debits and card payments
  
• an efficient processing infrastructure for euro payments 
  
• a common set of technical standards
  
• a common set of business practices
  
• a harmonized legal basis

Why did SEPA come about?

Back in 2000, European political big wigs got together in Lisbon and decided the EU would be one of the world's leading knowledge-based economies by 2010 - a plan that has become known as the Lisbon Agenda. Out of this stemmed the idea to support innovation and the idea of a single market by making it easier and cheaper to move money around the EU. The European Commission decided that cross-border payments should cost no more than domestic payments and, in 2002 the European Payments Council (a group of banks) sketched plans for how this would be done. Thus the Single European Payments Area was born.

 

Stay tuned for more on:

• Why is SEPA important? 
  
• Do I care if I don't do business in Europe?