Managing Enterprise Financials system in the Cloud

The purpose of this article is to describe the advantages of Oracle Financial Cloud through the process of implementing and deploying the solution set for financial systems of record and reporting. There are two key parts to the Oracle Fusion technology:

• Oracle Fusion Applications
• Oracle Fusion Middleware

The above user facing technologies are deployed on the technology stack described below:

• Infrastructure as a Service (IaaS): Compute and Storage
• Platform as a Service (PaaS): Database, backup, Business Intelligence, Big data
• Software as a Service (SaaS): Applications

For a brief introduction to the Fusion technology stack and its components, review another white paper/blog on “What is Oracle Fusion Cloud and Why Does It Matter” by the author (Jay Ramaswamy). Along with other solution sets being deployed in the cloud by Oracle, Oracle Financials was completely rewritten over a period of 8 years starting in 2007. Business users can subscribe to the SaaS model or install the technology stack on their premises of choice. Some key differences between using a hosted service and hosting on premises is in the investment in software licenses, hardware and network infrastructure, and ongoing maintenance, including upgrades. A subscription model to the Oracle hosted service does not require investment in the technology stack and license is managed through subscription fee. The cloud technology stack can also be implemented on premises. This requires investment in license, maintenance fees, hardware technology stack, and the client taking on the responsibility for upgrades.

Advantages:

Many businesses consider financial information about their operations with utmost importance from an operational perspective and very confidential. This is especially true for small to mid-size businesses that are privately held and managed. The technology stack offered by Oracle offers advantages with machines designated for each subscribing customer thereby ensuring data security and strict confidentiality. As businesses grow and operations expand, many businesses expand globally with operations and reporting in multiple countries, and need to ensure compliance with governmental regulations and reporting to key stake holders, and eventually stock holders. The Oracle technology stack subscription service is designed to be elastic and grow with the scalability demanded by the subscribing customer.

Essentially, businesses with global operations require globally scalable financial applications that are, from the start, enabled for such operational capabilities. Oracle Fusion Financials is certainly an application that is ready, out of the “proverbial” box, for such scaling of capabilities. A big advantage, hence the phrase “proverbial” in quotes, is that the implementation of the solution is not invasive and does not require investment in software license or hardware and networking infrastructure. This offers flexibility of pay-as-you-use model.

Oracle Financials include the following key modules: Ledger & Analytics, Accounts Receivable, Collections, Accounts Payable, Cash Management, Fixed Assets, and Expenses.

Under the expert guidance of consultants from Inspirage, these Cloud Financial modules can be configured to suit a business’s specific requirements and deployed rapidly. The business subject matter experts will be able to state business requirements from operations and regulatory perspective across the globe with the implementation experts. Inspirage consultants and professionals can also assist their customers to maintain, expand, and implement a dynamic business process to enable growth and expansion of operations over a longer horizon of operations.

With a robust Service Oriented Architecture (SOA), a big advantage for any business is to operate in a hybrid environment (partially in the cloud with other on-premises applications) where:

• The financial system is hosted by a service provider like Oracle.
• The other applications (third party applications and services) can be easily integrated with the financial system – e.g., payroll, bank, exchange rates, etc.
• After rigorous review with stake holders, users can add custom extensions between the PaaS and SaaS layers, under expert guidance from Inspirage to ensure consistent product usage that will enable easy upgrade paths.

The configuration process takes into account business units that will be required and provides for all the subledgers (AR, AP, Fixed Assets, projects, etc.) to be tracked by business units, and legal entities. Inter-company transactions, if any, can be set up and configured to provide online tracking and balancing of intercompany transactions in multiple legal entities, business units and multiple currencies.

A significant feature, as it relates to chart of accounts structure, has been introduced in the Financial Cloud application. Here is a comparison between R12 Oracle EBS (and prior versions) and Financial cloud:

R12 EBS	Financial Cloud	Added Benefits
No Chart of accounts structure	Chart of accounts structure, chart of accounts structure instances	The chart of accounts structure is the building block in the set up, geared towards flexibility and minimizing implementation efforts. Users can create multiple chart of accounts (structure instances) that share the same structure, but customizes each instance differently to fit enterprise reporting requirements across functions.
One balancing segment, secondary tracking segment	Up to 3 balancing segments	Create chart of accounts based on up to 3 balancing segments, thus allowing more granular transaction tracking and financial reporting.

 
This feature along, with financial category grouping in the chart of accounts, provides robust reporting at aggregated levels and capability to drill down to the details, extending to the individual transactions. The diagram to the right shows a sample tree structure (Hierarchy) enabling multiple reporting structure instances with versioning.

The following steps describe how a hierarchy structure is set up and used:

• Create account hierarchy structure to identify Management and operational between the value set values.
• Define date effective tree versions to reflect organizational changes within each hierarchy over time.
• Publish multiple hierarchy structures to balance cube (ESSBASE) for financial reporting and analysis of past, present and future structures.

The above enhancements are used very effectively by the tightly integrated ESSBASE cube with the Hyperion reporting user interface, to provide a very flexible and dynamic reporting capability. In most cases, financial and operational users can do most, if not all, their work with the Hyperion user interface without any need to go into the underlying application.

Use:

Another robust set of features enhanced in the Fusion Cloud is data security. Security is implemented through configurations at the business unit level, thus ensuring separation and security of transactional and some master data by specific business units across the global operations. This is implemented through the use of powerful and at the same time flexible Role Based Access Controls (RBAC) at the user level across the technology stack from database to applications and reporting. The access controls to menus and data by the users are managed across these three key criteria:

RBAC by user

1. What they can see?
2. What they can do?
3. What they should not see?

The chart of account structure described above can be used to implement segment level security where in specified users can only have access to transactional data, say at the business unit/LOB, cost center level, and no access to aggregated data at parent level of the structure.

With the workflow built into the SOA layer using Business Process Management (BPM) and Business Process Execution Language (BPEL), capability for implementing business specific workflow is delivered to users to manage business/region specific workflows for approval, status management, etc. With expert guidance from Inspirage, much of this can be maintained and updated by users as business requirements evolve. Workflow updates can be accomplished without the need for IT expertise, using drag and drop work flow objects.

When transactions are posted through the use of Subledger Accounting (SLA), all the transactions are simultaneously posted, to the GL, ESSBASE database, and multiple currency reporting ledgers. Standard two dimensional reporting and analytical multi-dimensional reporting is accessed through Hyperion and Excel interfaces. With some initial orientation and training, these are tools that most financials and operational professionals are very comfortable with and in widely spread usage. Additional reporting capabilities are available through Oracle BI publisher.

Management reports and dashboards are pre-built and available to executives and managers from the outset upon deployment.

• Income statements and Balance sheets
• Operational reports by legal entities, business units, line of business, cost centers and departments.
• Multiple dimensional views for infinite variety of “slicing and dicing” of data
• Creating and Editing KPIs
• Setting Up Targets
• Stating Tolerances
• Evaluation of KPIs

Oracle Cloud Financials has been designed for ease of use from three perspectives:

1. Ease of configuration, update and maintenance
2. Data import for master data and transactional data through macro enabled excel spreadsheets, and other file based import technologies
3. Automated generation of security enabled roles across legal entities and business units

For those of you familiar with having to set up access to menus and data based on responsibilities in R11x and R12x versions of Oracle Applications, this is a huge leap to roles based access to tasks, and functions within the application. The maintenance aspect from having to manage striped data across the operational unit structure is no longer required. Workflow is integrated with roles and much easier to implement by the users without intervention from IT professionals.

With tightly integrated identity management tools and Human Capital Management, setting up employees and contractors, on boarding and terminating employee/contractor access to systems, and underlying data is very easily accomplished at literally moment’s notice.

Deploying reporting capabilities that can be configured by the user for performing his/her job duties has been made very flexible without having to place reliance on specialized Information Technology professional’s support.

With all of the advantages and ease of use described above, there is the initial learning curve that will be required to deploy the applications in the cloud. The steepness of that curve can be greatly alleviated by using expertise from Inspirage professionals. Inspirage professionals are also experts in supporting the on-going lifecycle of the technology stacks, keep pace with evolution of business requirements, and do so without affecting your future upgrade path so that you can always stay current with the latest software version.