Oracle Financials Strategy

At the beginning of a year filled with many financial management challenges, here are two good questions to ask: “Is my company using credit risk policies and scoring models that were formulated last year or the year before? And what is my collections department using to determine who to collect from?”

Lyle Wallis, vice president of research for the Credit Research Foundation (CRF), was interviewed in the Jan 2009 issue of Oracle’s Financials Management newsletter http://www.oracle.com/newsletters/archives/archives_financialmanagement.html in an article entitled “Reduce Credit Risk with Accurate Scoring Models”. Wallis mentions automation as the only way to deal with the thousands of customers whose credit risk and worthiness is changing drastically. So along with everything else the global financial and economic crisis is causing us to re-think, companies need to re-jigger their credit and collections scoring models to “segregate customers that may be good credit risks from those in jeopardy of going out of business in the months ahead.” In other words, we need to evaluate what currently constitutes ‘good’ and ‘bad’ credit risk and criteria for collectability, and adjust operational policies, strategies, and metrics accordingly.

The abovementioned article touches on how companies can use technology to create scoring models to better identify and efficiently manage customers at most risk now and in the future. Oracle’s Credit to Cash products not only streamline the credit and collections scoring process, they also automate work assignment so collections agents focus on those customers who need that personal touch while automating collections activities for those customers who don’t. And once you’ve re-jiggered your scoring models, you may be surprised to learn who those customers are!

If you read the article in the Oracle newsletter and want to know more about what other companies are doing, Wallis has recently written one white paper, “Managing Receivables in the Midst of Today’s Economic Environment”, https://www.crfonline.org/publications/2008economy.pdf and one occasional paper, “Lessons for Businesses to Learn from Today’s Credit Crisis” https://www.crfonline.org/publications/Lessons_CFO.pdf available from the Credit Research Foundation.

Happy Reading! And Happy Re-jiggering!

Turbulent financial markets and tight credit have many companies and their employees on edge. What better time to leverage your existing ERP investment and sponsor an easy win for the finance organization?

We asked John Killen, Oracle's Global Solution Architect for Cash Management and Treasury, for a tip on a quick ROI feature that will be applicable to a majority of Oracle Financials customers.

Here is what John had to say:

If you or your clients continue to rely on manual processes to account and reconcile certain cash activity in your bank accounts, you are not alone. I regularly meet with cash, accounting, and IT managers around the world who are in the same position. They are very pleasantly surprised when I show them a feature they already own, which is delivered in Oracle Cash Management and supplements other bank reconciliation functionality. Since much of this manual effort arises from first notice or repetitive bank statement items like daily sweeps to / from your own internal bank accounts, net credit card deposits, bank fees, tax payments, etc; it is possible for Oracle to automate the procedure programmatically.

The feature provides a single screen that allows you to easily build and maintain rules that will match reference text within bank statement lines to automatically generate accounting and reconcile the activity. It turns an often tedious and time-consuming process into a fully automated and scheduled program. Once you implement this feature, you should have more time to consider other related areas like cash positioning and forecasting, cash pooling, and in house banking – all areas increasingly important during these challenging economic times.

And what are the customers saying about this feature?

“It works even better than expected. It saves us at least a few hours every day.” – Treasury Manager, US Based Manufacturer.

The feature was originally released in 11i and called Journal Entry Mappings and then enhanced and renamed in R12 as Bank Statement Cashflow Mappings. PeopleSoft Cash Management has a similar feature called Bank Statement Accounting. For more information, please review the Cash Management User Guide or support documentation available from Metalink. Alternatively, feel free to contact John directly.

While most of us in technology companies have enjoyed the freedom and flexibility to work more effectively, I wondered if my peers in Finance enjoyed the same autonomy. Is it reasonable to suggest that reconciliations and allocations can be completed as easily at home in the evening rather than staying at work for hours on end, waiting for other groups to complete their subledger updates and post them to the General Ledger? I believe it is. Best Buy not only clearly demonstrated that ROWE works but has defined key performance indicators to measure these improvements.

“Thanks to ROWE, people at Best Buy are happier with their lives and their work”, according to Ressler and Thompson. “The company has benefited too, with increases in productivity averaging 35 percent and sharp decreases in voluntary turnover rates, as much as 90 percent in some divisions”.

Was the technology, collaboration tools and software applications used by Best Buy to define, measure and achieve these improvements as well as enable employees to “have control over their lives” a part of their success? Did the Oracle implementation facilitate ROWE being successful in departments that never would have thought it possible in the past?

With technology now in place to free people from the cube, Ressler and Thompson are on a mission to make ROWE the new status quo.

“Fortunately we live in a time when this is possible. Today technology gives people incredible power over time and information. In our personal lives, technology means we don’t have to wait for the store to open to buy something. We don’t have to watch our favorite show the minute it airs or come down from Mount Everest to make a phone call. But this isn’t about the wonders of technology. This is about what technology could let us do and how we’re not taking full advantage.”

So why don’t we take full advantage of what technology could let us do?

According to a recent study by Andrew McAfee and Erik Brynjolfsson published in Harvard Business Review, “it’s not easy for most companies to deploy enterprise IT successfully. The technologies themselves are complicated to configure and test, and changing people’s behavior and attitudes toward technology is even more challenging." While major ERP players continue to deliver complete solutions that streamline configuration, testing and deployment, it’s not the full answer to the riddle.

Another factor that impacts our adoption of technology are newly emerging trends in the competitive landscape. McAfee and Brynjolfsson's analysis showed that “competition is accelerating within traditional industries within the broader U.S. economy. Not because more products are becoming digital but because more processes are”. As processes become more digital and emerging technologies enable employees to work more effectively, we can expect that “the firm with the best processes will win in most or all markets.”

What do you see as the barriers or enablers to a Results Only Work Environment (ROWE)?

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.