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REMINDER

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

Prepared by:Paul Kirch, FusionCloud Consulting

Session ID#:

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Date/Time Location Session Session Title Presenter (s)

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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

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.

Paul Kirch, Principal

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■FusionCloudConsulting■Inflection Point■Offering Overview■FusionCloud Consulting■Methodology and Deliverables■Website■LinkedIn Page

■“A Tale of Two Cities”

Introduction

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FusionCloud Consulting

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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.

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■ 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

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ERP Software is at an Inflection Point

Development of ERP Software

1995

1999Widespread adoption of the internet

Emergence of ERP SAS offerings

2011

Widespread adoption of ERP as a SAS offering on “the cloud”

2020?

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The Market

Forrester Research

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Forrester Research

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Offering Overview

■ Consulting ■ Management■ Functional ■ Technical

■ Training■ On-site■ On-line■ Mobile

■ Staff Augmentation

Training

Func TechConsulting

Staffing

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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

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Methodology and Deliverables

Analyze & Prepare

Fit/Gap &“Imagine”

ConfigureDeploy &

TrainSupport

Questionnaires and pre-prepared workshop materials

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

1 2 3 4

On-shore and off-shore support and maintenance

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Methodology

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

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Fusion Applications

■ Human Resources▪ Identify Management▪ Human Resources▪ Payroll

■ Financials▪ General Ledger▪ Receivables▪ Payables▪ Fixed Assets

■ Intercompany

■ Projects

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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

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Cloud Consulting Strategy

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Website

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LinkedIn Page

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AgendaA Tale of Two Cities

■Project Overview■Multi-Org Concepts■Intercompany■Conceptual Understanding■Introduction to eB Tax

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Project Overview

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■ 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

Project Overview

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■ 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

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Multi-Org Concepts

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■ Ledgers and Ledger Sets

■ Company Codes/ Balancing Segment Values (BSVs)

■ Legal Entities

■ Business Group

■ Operating Units

■ Inventory Org

Multi-Org Concepts

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■ 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

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IFRS

IFRS EUR

Secondary Ledgers

Legal Entity/BSV’s

OU- Manufacturing

Inventory Org

OU- Distribution

OU- Sales

HQ Company

EMEA Ledger Set

4

EUROPE EUR

423 429

K

4373

H

Russia RUB

Primary Ledger

6

M ON L

Global Inventory INV

4 6 UK ES IR Nordic EU OPSNOK

RU

54348 444482493 4279

494

1

1

E

FR4248

IT4269

JIA

Europe USD

4226

8 DE4288

4314

442

5

74326

IT24388 450

NL PL458

FI4849

UAE9997

HRV4898

TR9999

SA8880

Ukraine

4910

GR

4920

RO4957

EUROPE EUR

2

4605

IFRS EUR

3

3

G

4517

4559

RU

RU4568

2

FB

C

D

9923

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Intercompany Transactions in R12

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■ 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

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Asia Europe

0% VAT – Manufacturing

Export

Reseller/Distributor

HQ

Bill From

Ship From (EU Registration)

Ship To (Registered/ Non Registered) ** Reseller in Netherlands, then NETH

21%. Other member state, VAT Registration, etc.

#1 Internal SO/IR

#4 AR

#3 Interco AR/AP

#4 Material# 3 Interco AR/AP (0%

markup, No VAT)

HQ Country Registration/ No

VAT

#2 Material

Import from CNY

NETH Offset VAT of 21%

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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

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Conceptual Understanding

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Customer

Entity ASelling Entity

INV-Org A

Bill-to Ship-to

Entity BShipping

EntityINV-Org B

OM: Book Sales Order - Reserve with Ship-From Warehouse

of Inv Org B

AR: Trade Invoice To Customer

OM: Pick Release, Ship-Confirm, Inv Interface, Costing

AR: Create IC Invoice To Entity A

AP: Create IC AP Invoice from Entity B

Drop Ship

IC Invoice

Sale and Invoice Shipment

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Customer

Entity A“Selling

Entity”INV-Org A

Bill-to Ship-to

INV-Org B

PO: Internal RequisitionPO: Create Internal Order

OM: Import Internal Sales OrderOM: Reserve, Pick Release, Ship-

Confirm, Inv Interface, Costing

AR: Create IC Invoice To Entity AAP: Create IC AP Invoice from Entity B

Sale and Invoice – not directly related

Entity BShipping

Single Node Intercompany

Shipment and IC Invoice

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Global Purchase Agreement(Centralized Procurement)

Supplier

Entity A“GPA Entity”

INV-Org A

PO Pay

INV-Org B

PO: Purchase Order (Auto)

PO: Create Requisition

AR: Create IC Invoice To Entity AAP: Create IC AP Invoice from

Entity B

Receive Purchase Order, Ship to

ShipmentEntity B

“Procuring”

Requisition for ItemOn GPA

INV-Org C

INV: Create Intercompany ARINV: Create Intercompany AP

INV: Create

AP: Create IC Invoice To Entity AAR: Create IC Invoice to Entity B

Entity C“Accounting” Intercompany AR

Intercompany AP

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Customer

Entity A“Selling Entity”

INV-Org A

Bill-to Ship-to

INV-Org B

OM: Import Internal OrderPick, Pack and Ship

PO: Create Internal RequisitionPO: Create Internal Order

AR: Create IC Invoice To Entity CAP: Create IC AP Invoice from Entity C

Not directly related to transaction

Shipment Entity B“Procuring”

IR/ISO

INV-Org C

INV: Create Intercompany ARINV: Create Intercompany AP

INV: Create

AP: Create IC Invoice To Entity AAR: Create IC Invoice to Entity B

Entity C“Accounting” Intercompany ARIntercompany AP

Multiple Hop Intercompany

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Global Tax

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■ 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 3 rd 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.

Why is eB Tax Important?

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General Ledger

Accounts PayableAccounts

ReceivableeB Tax

Purchasing

Order Management

Oracle Channel Revenue

Management

Oracle Lease Management

Tax

InvoicesCredit Memos

Tax

InvoicesCredit Memos

AP Invoices

Purchase OrdersRecepts

TaxCredit Memos

Tax

Journals

Journals

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Tax Reporting

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Conclusion

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Release GA Date Premier Extended Sustaining11.0.3 May, 1999 February, 2002 Not offered. January, 200911.5.1-11.5.6 May, ‘00-Jan, ’02 July, 2006 “ Indefinite11.5.7 May, 2002 May, 2007 “ “11.5.8 November, 2002 November, 2007 “ “11.5.9 June, 2003 June, 2008 “ “11.5.10 November, 2004 November, 2009 December, 2014** “12.0.0 January, 2007 January, 2012 January, 2015 “12.01 April, 2007 April, 2012 April, 2015 “12.02 July, 2007 July, 2012 July, 2015 “12.03 October, 2007 October, 2012 October, 2015 “12.04 January, 2008 January, 2013 January, 2016 “12.05 May, 2008 May, 2013 May, 2016 “12.06 November, 2008 November, 2013 November, 2016 “12.1.1 May, 2009 May, 2014 December, 2018 “12.1.2 December, 2009 TBD TBD “12.1.3 August, 2010 TBD TBD “

12.2.1 September, 2013 TBD TBD “

12.2.2 October, 2013 TBD TBD “

12.2.3 May, 2014 TBD TBD “

** 11.5.10 desupport notice from Metalink, (Doc ID 806593.1)

Oracle Desupport Dates

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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.comCell Phone: 408-316-5899

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Please complete the session evaluationWe appreciate your feedback and insight

You may complete the session evaluation either on paper or online via the mobile app

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Appendix