Removing Silos and Operating a Shared Services Center with EBS

Removing Silos and Operating a Shared
Services Center

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 Origin
 Founded by industry veteran Helene Abrams who was Oracle’s first Applications consultant
 Who we are
 Product company supporting Oracle E-Business Suite customers’ needs for financial and operational change
 Oracle Gold Partner since 2007
 Patent for Consolidation Methodology, 2012
 Our current target markets
 Large global corporate organizations
 Cross-industry
 Our current product lines
 Four business transformation software product lines:
 Consolidation merges and harmonizes one or more disparate, differently-configured, database instances into a single, fully-
functional application
 Divestiture filters data when a company is carving out or selling off part of their business, to create a stand-alone fully
functional environment for the divested entity with a limited data set
 FlexField changes the financial chart of accounts to support standardization and increase reporting reliability retaining all
transactional history
 Reorganization changes or moves any configurations or set-ups and all related transactions. Reorganization is a broad category
and includes software solutions for merging or separating organization units, ledgers, inventory organizations, or legal entities,
calendar changes, currency changes, etc. Reorganization Software is used to comply with new regulatory or statutory changes,
new organization structures, entry into new markets, and to support mergers, acquisitions, or divestitures.
 New product lines
 Automated Financial Audit
 C Collection Analytics
 Does not violate Oracle Support Agreement
About eprentise

Introduction
What Are Silos, And What Causes Them?
What Do Silos Have To Do With Shared Services Centers?
Shared Service Center Operations And Challenges
Case Study
Agenda

Objective 1: Learn the root causes of silos in Oracle E-
Business Suite (EBS) implementations
Objective 2: Understand how silos impair financial
operations and create barriers to operating a Shared
Services Center (SSC)
Objective 3: Explain assumptions and common
misconceptions about a SSC
Objective 4: Learn techniques to enable different areas of
the organization to work together and eliminate silos of data
Objective 5: Explain the mechanics of running an efficient
Shared Services Center and supporting global operations
Learning Objectives

In the story of the Tower of Babel, people’s inability to
communicate – they were all speaking different languages
- resulted in them being unable to finish constructing the
tower.
The result: Project failure… all because of silos.
The Tower of Babel

Silos are information
locked in disparate
databases,
separate ledgers, different
operating units etc.
They are the barriers to
doing business efficiently
and effectively that are
overcome everyday
through workarounds or
forgone opportunities.
What are Silos?

 Existing silos in EBS originated in several ways.
 Available technology at the time of implementation.
 An understanding of how a global business should operate,
 Knowledge of EBS configurations, hierarchies, ownership, and security.
 A solution for quick integration of acquired systems (M&A activity).
 Interdepartmental communication and collaboration.
 Standardization:
 Process level: corporate standards, governance, and controls
 Data level: data formats, naming conventions
 Different divisions within a company were allowed to setup their own operating units to
meet their requirements eventually leading to fragmented integration, more complexity
and isolation.
 Company grew by acquisition adding new EBS instances with each acquired company.
 Original configuration didn’t support the current business – original setup including
history abandoned for a new setup with no way to communicate between structures.
 Different departments tackled requirements or problems on their own rather than
working together to find a solution that fits everyone.
 Corporate standards, governance, and controls were not in place – changes done “on-the-
fly”.
Root Causes of Silos in EBS

 Information (data) follows the fundamental law of entropy
 An organization’s complex IT systems like E-Business Suite (EBS) become more complex as a company grows
 Companies evolve
 The larger the organization, the more likely it is for operational or reporting errors to cause major problems due
to a lack of alignment between ERP systems and business process changes that have occurred
 Systems that support one part of the business may not support another part of the business
 Shared Service Center operations depend on being able to accommodate differences in the business while at
the same time supporting global and enterprise standards in data and processes
 Common business functions develop different processes due to heavy corporate
growth
 Generally due to lack of governance policies and procedures or poor administration of them
 Redundant processes and data have high costs in terms of both time and additional people resources
 When a company strategically eliminates redundant processes and data, their use of redundant hardware
diminishes, the quality and timeliness of business information improves, and its people are able to collaborate
in a more streamlined manner
 IT has a significant impact on the bottom line because operating, maintaining,
and synchronizing an array of E-Business Suite instances, charts of accounts,
calendars, and other configuration items is time-consuming, expensive, error-
prone
 Globalization is different than multi-national
What’s the Problem?

A SSC must accommodate different cultures, different
time zones, different statutory and regulatory
requirements, and different business processes
The savings of a SSC may only be recognized if the SSC
resources can deliver the services more economically
than individual businesses
Silos significantly impede the savings resulting from
operating a SSC
 Data can not be shared effectively
 Communication is hampered because of different
interpretations of the data
Assumptions

Poll Question

 Based on an economy of scale
 The more that common business process can be standardized, the greater
the volume of transactions that the SSC can handle
 SSC resources are trained to perform specific tasks efficiently so fewer
employees need to be dedicated to common operational responsibilities
 An SSC is usually it’s own profit center
 It is different than centralizing functions
 An SSC operates under a service-level agreement from the organization (the
customer of the SCC)
 Usually specifies turn-around time, hours of operation
 Profit is driven by a cost charged to the division minus the actual cost of processing a
transaction
• For example, if the SSC averages a burdened cost of $10/hour per person, and each resource is
able to process 10 invoices per hour, then the cost of processing an invoice is $1.00
• In this case, the SSC may charge the division $1.50 per invoice to account for overhead costs and
still make a profit
 A SSC maintains a full set of financial and management reports for its operations
 A SSC establishes accountability for providing services to its clients
How Shared Services Centers Operate

Relative Merits of Traditional Centralized IT Versus Service-
Optimizing IT Shared Services

Differences Between SSC and Centralized Operations

 Data and Process Standardization
 Calendars, Charts of Accounts
 Standardize key flexfields
 Similar processes (matching, cutting checks, payroll processing, closing process, depreciation, costing,
etc.)
 Single instance
 Automated end-to-end processes
 Governance
 Different parts of the organization may not be accustomed to sharing their data
 Data accessibility
 Understanding local and statutory requirements of each location
 Supporting infrastructure
 Volumes
 Time zones
 Maintenance windows
 Escalation management
 Training
 Communication
 Setting up organization structures for visibility and transparency (ledgers, legal entities,
operating units, business groups, inventories)
Critical Success Factors of a SSC

Examples of Silos By EBS Structure
Silo
Impact
Statutory and
Regulatory (SEC)
Requirements
HR
Management
(i.e. Transferring
Employees)
Tax Reporting
Compliance
Customer
Relations
Supply Chain
Management
(Vendor
Relations)
Workflows
Separate
Instances
Separate
Business
Groups
Separate
Ledgers
Separate
Operating
Units
Separate
Inv. Orgs.
Multiple
COAs and
Calendars

 Consolidate repetitive data-centric processes to support migration to a shared
services center or a centralized data center
 Generate financial reports directly from the system of record
 Reduce operating and maintenance costs to improve the bottom line
 Create a single source of truth to improve business processes and business
intelligence
 Enable revenue optimization whenever and wherever possible to improve the
top line
 Capitalize on enterprise-wide synergies to leverage purchasing and to better
understand customers
 Obtain access to new markets and the opportunity to scale the business
 Simplify audit requirements and align finance operations with corporate strategy
 Headcount reduction
 Operational Center of Excellence in the organization
 Leverage economies of scale
 Enables global negotiations and agreements
Incentives & Drivers of Operating a SSC

 Cultural differences for
consideration
 Style of operations
 Normal working hours
 Differences create opportunities for
system maintenance windows but
increase complexity involved in
scheduling
 Regional holidays
 Multiple languages
 Different time zones
 A competitive global company will
leverage this varied experience by
facilitating the transfer of best-of-
breed practices throughout the
organization
The People Elements of a SSC
Diversity gives global
organizations an
advantage over their
domestic counterparts.
By operating in different
countries, the
organization is exposed
to a wider variety of
business practices and
experiences.

Focus on a cultural shift within a company that
encourages the sharing of information
 Operations based on the collective information that is
stored, shared, and used consistently among diverse parts
of the business
 Information available to all those who can utilize it
 Creates greater efficiencies
 Streamlines operations
 Reduces process redundancy
 Business processes are intrinsically linked and not
confined to departmental, geographic, or organizational
boundaries. In a global company, many of the processes
are run through a shared services model.
Sharing Business Processes

 Results in huge cost savings
 20% to 40% annualized cost reductions with a payback generally
in less than two years
 Results in intangible benefits including
 Better financial visibility and customer service
 Tighter controls
 Agility to rapidly accommodate business changes such as
acquisitions or divestitures
 Improved cash flow
 Cross-selling opportunities
 Economies of scale
 Standard processes enable a global team to jointly service
customers, and reduces duplication of administrative, supply chain,
and R&D efforts.
Eliminating Redundant Processes

Shared services center as a way to standardize on
common “global” processes such as:
 Corporate treasury
 Invoice processing
 Receivables processing
 Sarbanes-Oxley Compliance
 Account maintenance
 Corporate reporting
 Expense processing
 HR maintenance
Determine Processes That Can Be Shared

Effective management of shared enterprise assets
is necessary for an effective global strategy
Collaboration
Implementation of effective controls
Idea of the “benevolent dictatorship”
1. There can be no wavering about where the finish line
is placed (a single global instance)
2. Anything less than success or short of completion is
not acceptable (no special exceptions)
3. Obstructionism is not tolerated
Governance

Poll Question

Achieving a global EBS platform relies on:
 An ability to access quality information
 Recognizing the role of technology in the successful
integration of the enterprise
 Laying the groundwork for different parts of the
business to become integrated with core business
processes and decision-making.
Though IT is core to enabling a global ERP, it is the
human component – leadership, communication,
and governance – that drives its success and
delivers results.
Building a Globalization Strategy

 Standard processes and controls will be implemented across the
globe
 Processes will be consolidated where possible
 Local legal requirements will be incorporated to all processes
 SSC should undertake as much processing work as possible
 Reduce costs and improve efficiency
 Leveraged low cost locations and standardized on global business processes
 Eliminate redundant efforts that are common such as month-end close and
expense reimbursement
 Consolidate systems and instances to minimize costs and training required
 Create additional capacity for growth
 Reduced operational complexity
 Opportunity to capitalize a diminished number of entities (financial
institutions, bank accounts, suppliers, etc.)
Operating Principles of a Global SSC

 Identify the information that exists.
 Determine what information needs to be shared.
 Determine what information needs to be maintained separately.
 Identify common business processes.
 Must be championed from the top.
Getting Started with a Shared Services Center
All of the data must
be consolidated
into a single
instance.
There must be a
single Chart of
Accounts that
meets all of the
legal and reporting
requirements of the
business.
All of the data and
business processes
must be complete,
consistent, correct,
and accessible to
those who need it.

 Determine what processes the SSC will cover. Initial evaluations of business processes are to reveal which of
them share the most overlap amongst the different operating units. The more common the process, the
greater priority it has for implementation.
 Standardize common business processes. Although the different divisions of your enterprise perform similar
tasks, their methods may vary. Any processes you wish to consolidate to a shared services center need to
follow an aligned methodology that still meets the needs of every affected division.
 Identify common data. The input information for the business processes also needs to be standardized.
When an SSC employee spends additional time consolidating information from disparate sources, then the
cost associated with that process increases.
 Measure current operating costs. A shared services center implementation needs to be justified
quantitatively by predicting the potential savings. Your organization’s initial cost per process needs to be
determined to establish a baseline.
 Acquire benchmarks. Market research companies offer compiled data providing insight regarding
benchmark maximums, minimums and averages for enterprise operating costs. Your company can use such
information to see how you currently stack up against the competition and what the best practices for
improving your performance are.
 Set up a service agreement. Since your shared services center is going to be operating either as a profit
center or as a cost center, your company needs to establish prices and conditions for what each division is
responsible.
 Implement better business practices. Introducing a common chart of accounts and standardizing ledgers will
streamline your organization’s information as well as improve the efficiency of the SSC. Secondary ledgers
reduce the complexity involved with statutory and regulatory reporting, and also allow you to post data
across multiple ledgers with a single entry.
 Recognize the actual return on investment. After your shared services center has been implemented, the
final step of the project will be to compare your current operating costs with the original ones, and
determine what percent of the actual benefits were realized.
Roadmap to Implementation

 R12 includes major advances in its
accounting engine
 Single engine manages all posting
activities into GL
 Subledger accounting
 Other new features provide extended
functionality, making it simpler to
perform financial consolidation as well
as to remain in compliance with
statutory and regulatory requirements
 Primary and Secondary ledgers
 Ledger sets
 A single chart of accounts enables
companies to take full advantage of
these R12 features.
A Single, Global Chart of Accounts
28
 Accounting policies are
standardized across the
entire enterprise
 Data remains consistent
and has full drill-down and
roll-up capability,
auditability, and visibility
into all of the activity for the
entire ledger set
 Conversions not required
for data warehouse
queries
 Facilitates the movement
to a shared service center
 Increases the level of
enterprise governance and
control of new code
combinations

 There may be substantial infrastructure expenditures
 A single global instance means:
 Higher volumes
 Longer batch processing time windows
 More network traffic
 Longer backup cycles
 Longer test cycles
 BUT, having several instances and systems multiplies the cost
(licenses, hardware, staff) and introduces a different complexity in
reconciling and synthesizing corporate information.
 Four main technology issues surrounding globalization:
 Availability
 Access/Security
 Performance
 Functionality
Challenges

Prearranged level of operational performance
during a period of time
 Service level agreement or “three nines”/”five nines”
 To a user, it means the ability of the user community to
access the system
 Scheduled vs. Unscheduled
downtime
 Maintenance
 Patches, configuration changes, etc.
(reboot required)
 Hardware/software failure
 Environment anomaly
Technology - Availability

 Support
 Break-fix and statutory/critical patches to EBS
 3-tier service level agreement (SLA)
 Each tier corresponds to the estimated amount of resources and time required to resolve
issue
 Pre-determined acceptable amount of scheduled downtime
 Change request
 Simple change
 requires less than ten support days to implement (e.g. minor functionality modifications)
 Included as part of existing SLA, regression testing not required
 Planned change
 requires more than ten days (e.g. major development, acquisitions, projects, upgrades, etc.)
 Release management
 Regular updates to system
 Large portion of planned downtime
 Better control of User Acceptance Testing (UAT) and Regression Test Bed (RTB) cycles to
enhance quality and reliability of releases
 Optimal use of environment and DBA resources – close coordination with DBA and
infrastructure teams
 Central coordination of release and environment management activities to improve process
efficiency
3 Types of Availability

Poll Question

Case Study: Global Supply Chain ManagementCase Study: Global Supply Chain Management

Case Study: Global Supply Chain Management

 Global coverage of some processes only (AP, Travel expenses etc.)
 Opportunities to take on similar activities in other countries / regions
 Regional delivery of all processes
 Opportunities to centralise key processes globally
 Scope currently limited to “traditional” routine transaction
processing activities
 Opportunity to take on additional more complex activities
Experian – Global Finance Shared Services
Finance Process Melbourne Nottingham Santiago
Accounts payable and travel
expenses
  
Accounts receivable and credit
collections

 excl.
Norway
Costa Mesa
General ledger In-country  UK only 
Payroll outsourced  UK only Costa Mesa
Billing   some UK/I
Business
units
Fixed assets and depreciation   
Intercompany processing and
reconciliation
  
Cash management / bank
reconciliations
  Costa Mesa
Current
Transaction
Processing
Scope

Issues Faced Mitigations
Availability / Support
Maintaining 24x7 uptime
• Global Agreement made to “Planned” hours of operations and set
hours for outages
• Substantive PRODUCTION and DR infrastructure housed /
maintained in data centers
Global Support / Help Desk
Presence
(24x7 support)
• Co-Located regional support teams in major regional centers
• Follow the sun; Multi-Shore support locations (Americas / Europe
/ India)
• Single Global Incident tracking system (USD)
Performance:
Concurrent Request Monitoring
• Centralized recurring jobs (interfaces/reports etc…) to a
standardized CONCJOB user –monitored by Global Support
• Support is best qualified to manage ConcMgr usage, capacity, and job
conflicts
• Distribute business critical assignments to key business user
• Made the business accountable for
• Goal is to move all to defined Monitoring group, use automated
monitoring tool
Experian Technology Issues & Mitigations

Change Management
Prioritizing Change
Budget to support change is not
endless. Conflicts for business to
achieve intra / inter BU concurrence
arise
• Centralized annual change budget (HR and Finance)
• GPO’s responsible for prioritizing work / Not BU’s
• Significant change vetted via “Business Case” standard
• Adoption to Release Mgmt and Release Cycles concept (s)
• Business acknowledgement to degrees of change
Configuration Access:
Conflicts occur on what is an
“allowable” system change vs. what
types may be intrusive, and who can
implement
• Changed evaluated between GPO / SME’s, prioritized and
characterized. Potential intrusive change requires UAT and
Regression Testing activity (include SM signoff)
• Created defined EBS “SuperUser” responsibilities for targeted
deployment
Language of your business
Best practice vs. reality of global use
Impact of additional support overhead
related to MLS
• English is default, exceptions have be approved based of size and
impact of regional operation involved
• Currently supporting: English, Portuguese, and Spanish (planned)
• Movement of work to regional SSC’s where user's language skills
are recruited

Access / Security
Configuration Access:
Conflicts occur on what is an “allowable”
system change vs. what types may be
intrusive, and who can implement
• Changed evaluated between GPO / SME’s, prioritized and
characterized. Potential intrusive change requires UAT and
Regression Testing activity (include SM signoff)
• Created defined EBS “SuperUser” responsibilities for targeted
deployment
EBS Applications
Responsibility Growth (A
runaway train):
Combination of 30+ countries, 4 languages,
and 5 major business threads
• This is still a Work in Progress
• Assigned GPO and SME resources to subject areas
• Leveraging Oracle GRC functionality to identify potential
responsibility candidates
• Retrofitting / consolidating responsibilities based on SCC use or general user
designation

Thank You!
Contact
- One World, One System, A Single Source of Truth -
Helene Abrams
407.591.4952
habrams@eprentise.com
www.eprentise.com
www.AgilityByDesign.com
www.crystallizeanalytics.com

Removing Silos and Operating a Shared Services Center with EBS

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