Oracle EBS 12.1: A Recipe for Success

A business strategy in today’s fast-paced economic environment is a constantly changing process. To remain competitive, an organization’s packaged enterprise application infrastructure must provide a level of adoptability that supports this dynamism. When business challenges warrant enhancing existing information systems, mission-critical packaged enterprise applications must be upgraded to ensure that these business processes will remain consistently linked to customer requirements.

In order to remain competitive, demands to reduce costs are being made with the added expectation of no loss or impact on business process. As a result of corporations becoming Global and due to M&A activities, companies are managing business processes and IT operations across multiple business unites and locations.

Therefore organizations have to meet global and local regulatory compliance requirements and mitigate risks across the enterprise.

More internal IT organizations have started feeling the strain from demands for more detailed, timely information as a result of an expected rise in government oversight as well as a heightened regulatory compliance environment.

Companies are realizing that the only way that they can achieve sustainable cost reductions and meet most of the above challenges of being a Global Organization is through standardization and simplification of the processes. This can be achieved using the new features and functionality of Oracle EBS 12.1.

To do or not to do – that IS the question

The upgrade can impact various facets of your organization. Hence, it is imperative to assess the impact that the upgrade would have on your Business and Operations, Finance, IT strategies, Manufacturing and Inventory Management. The success of any upgrade would depend upon two key factors: how well defined an upgrade strategy is and a solid, flawless execution.

Determine Drivers for Upgrade

Following are the Key Drivers one should think when an upgrade is needed:

a) Establish common business processes and standards
· Simplification – reduce complexity of the local processes
· Standardization/Automation – Use or Oracle EBS 12 and best of breed technologies to standardize processes

b) Support Global reporting needs
· Financial reporting – the baseline for every organization (External, internal, Multi GAAP, SOX, etc.)
· Managerial reporting – Delivering information to the management team (Operational reports, HR reports, IT performance reports, etc.)
· Composite reporting – Delivering Business Analytics (Profitability analysis, Budget to actualcomparisons, Risk analysis, etc.)
· Business performance and risk reporting – Linking Strategy and execution (Planning/Forecasting, etc.)

c) Shared Services – Delivering Financial process in a consistent and quality manner at the lowest possible internal cost. Many organizations are establishing shared service centers to optimize their cost structure and reduce risk.
· Management re-focuses on the real drivers of value and their core businesses
· Resources freed up to do what they do best
· Higher service levels – failures in routine processes do not get in the way of business performance
· Costs are reduced in Accounting, Finance, and other functions
· IT support complexity is reduced
· Short term arbitrage benefits
· Improved visibility of the effectiveness and efficiency of non-core processes
· Better control of the cost of business support services
· Reduced business risk/increased visibility of controls

d) Meet Global and local regulatory requirements
· IFRS and Tax Compliance – Accounting Standards worldwide moving towards IFRS to have a common set of reporting and tax compliance. Many countries are adopting it. Conversions to IFRS are therefore mandatory for the organization pushing for an Upgrade need

e) Reduce total cost of ownership (TCO) of Oracle EBS by analyzing
· Multiple Instances – Resulting in infrastructure costs, resources, customizations, interfaces, application integration, support maintenance and upgrades
· Data Quality – resulting in ongoing transformations for analytics, inconsistencies in customers, suppliers and employees
· User Training and Adoption

f) Time, Cost, R12.1 Skills and ROI – Traditional, upgrade initiatives have been looked at as periodical transactional events and are not included as part of the overall IT strategy of the organization. However, with the diminishing budgets and the emphasis on quantifiable ROI, the CIOs need to find the right consulting partner, who has the capability to provide a predictable upgrade roadmap with correct time and cost estimates, as well as have the required expertise skills. To derive the maximum value out of your upgrade initiative investments, the partner should offer advice on areas of the applications that have not yet been leveraged for the process improvements and new technology areas that can be leveraged.

Leveraging Key Oracle R12 Functionality and Benefits

a) Establish common business processes and standards
· Sub-ledger Accounting allows organizations to operate under accounting policies and rules throughout the enterprise
· e-Business Tax offers an organization to consistently process and regulate numerous taxes
· New ledger system allows an organization to store financial transactions easily and have easier user access
· Oracle Payments allows an organization to centrally credit and debit payments
· Single point of access allows efficient management of bank accounts and numerous banks
· Simplify inter-account reconciliation for key business flows such as procure-to-pay or order-to-cash

b) Support Global reporting needs
· Sub-ledger Accounting allows organizations to report financial transactions in multiple ways to meet local and global reporting needs
· Increase the efficiency of reporting across operating units and ledgers
· Streamline reporting and inquiries by leveraging a common and consistent data model across all sub-ledger applications

c) Shared Services
· Increase the efficiency of shared services and single database operations with streamlined ACCESS, processing and reporting across operating units

d) Meet Global and local regulatory requirements
· Endure both corporate visibility and local compliance by automatically creating accounting for all legal entities and multiple accounting representation
· Document test, monitor and certify ongoing compliance with Sarbanes-Oxley, JSOX, HIPA and other global regulations using GRC (Governance, Risk and Compliance)

e) Reduce total cost of ownership (TCO) of Oracle EBS 12.1
· Reduction in TCO by system consolidation and administrating fewer systems
· Reduction in TCO by shared support model

Why traditional approaches are not sufficient

Most of the existing solutions for Oracle EBS upgrades do not incorporate structured assessment processes. There is a lack of comprehensive upgrade planning. Upgrades are points in time of the application lifecycle that provide a friendly trigger to enable the organization to consider the available options. These options emanate from the consideration of the future state of the business and opportunities for realizing the business objectives as well as reducing IT costs.

If the initial assessments are not adequate or rigorous, organizations will be unable to adopt a long term focus while planning their upgrade strategy. This often results in upgrades being more technical exercises, where the assessment offers little or no focus on the functional or transformational aspects of the upgrade. Organizations are therefore unable to plan for long term decoupling of the technology and process layers. Such assessments are theoretical exercises rather than enablers for planning, executing and stabilizing the upgrade effort.

Decision Interface’s experience suggests that a major reason why organizations fail to optimally extract value from their upgrade initiatives is due to a common perception that upgrades are isolated initiatives and should not be tied to overall business strategy. Business should adopt a holistic approach to enterprise application upgrades and ensure a long term focus on the goals associated with the functional and transformational aspects of the upgrade, especially when upgrade to something like the Oracle EBS 12.1 environment.

The Delivery Process for the Enterprise applications upgrade

Based on our industry experience, Decision Interface recommends that the organization should have an integrated upgrade strategy to align it with their strategic initiatives in order to derive maximum value from their incremental investments in Enterprise Applications.
To achieve this goal, there are three key elements in the upgrade strategy that must be considered.

1) Alignment with Strategic Initiatives of the Organization: Instead of treating the upgrade as an isolated initiative, organizations should view the upgrade process as an integral activity closely aligned with the business objectives of the organization. As business requirements and business environment changes, the processes and related applications will need to change and the modifications made to support the functional value. Organizations that are able to overcome this hurdle can turn the upgrade process into a positive opportunity and achieve a competitive advantage, improving business processes, compliance to the regulatory needs and creating cost efficiencies.

2) Use an Upgrade Assessment based approach to create and complete upgrade roadmap: Before conducting a mission critical application upgrade, organizations should embark on a comprehensive assessment to:

a. Discover whether Oracle EBS 12.1 will help achieve the business goals – before investing significant time and money
b. Learn ways to streamline the work, tighten controls and automate manual processes
c. Find out which problems Oracle EBS 12.1 will solve and which it won’t
d. Understand the right timing for the EBS 12.1 upgrade based on the needs assessment

3) Use an experienced and trusted partner: Not all organizations need to partner with a third-party implementation team. However, all organizations need an experienced leader. Whether done “in-house” or teamed with third-party providers, experience is the key – not with the product but with the process.

Decision Interface’s upgrade methodology, ManageIT, consists of four separate stages, Assessment, Envision, Deliver, and Optimize. The ManageIT process provides specific phases, tasks, and deliverables needed to deliver the upgrade/reimplementation project to the client.

The stages are unique in the phases/tasks they offer but can overlap durations where multiple stages can be in process at the same time. This allows clients the flexibility to:

1. Assess the business environment and project needs to develop a common strategy.
2. Envision the user’s requirements and identify key future business processes and workflows to devise if, when, and how to implement business, system, and technical needs.
3. Deliver a completed solution based on the plan identified during the Envision phase.
4. Optimize a system by auditing its performance. This allows the organization to identify any additional project needs to be addressed via another project or change request.

Conclusion

Organizations have traditionally viewed Enterprise application upgrade initiatives as transactional events with no or minimal strategic importance. They often do not have an upgrade strategy or if there is one, it is hardly aligned with the strategic objectives of the business.

Decision Interface, based on our past experiences in managing end-to-end upgrade initiatives for various enterprise applications, believes that the Decision Interface upgrade methodology, ManageIT, will help organizations to change the perspective and establish an enterprise application strategy as a critical component of their business, operations and IT strategy. Why do we believe this? It has worked and it will work.