Oracle Financials Accounting Hub in The Banking Industry

Agenda
!! Introduction !! Case Study - Overview !! Integration Challenges in a non FAH world !! FAH Solution Offerings !! FAH Process Overview !! Implementation Approach !! Lessons Learnt !! Application Snapshot !! Q&A
Copyright 2011 Fujitsu America, Inc.
Global Oracle Practice

!! Fujitsu / Oracle 20+ Year Relationship !! End-to-End Solutions
!! Strategic Assessments, !! Implementations &Upgrades !! Hosting !! Managed Services / Support
!! Center of Excellence
!! Thought Leadership !! Proof of Concept Environment !! ROI Discovery Sessions
Oracle Global Strategic Partner
Case Study - Overview

!! One of the largest Japanese Bank !! Current Oracle footprint
!! Oracle EBS 11.5.10 !! Oracle GL, AP, FA
!! Many legacy systems interfacing directly to GL !! Reporting Data extracted from various sources !! The Big Question
!! R12 upgrade with or without FAH? !! How to handle multiple GAAP reporting?
!! Proof of Concept Engagement

!! Three Legacy System
Case Study - Overview

!! POC - Objectives
!! Multi-GAAP Accounting !! Drill Down from GL to Sub-Ledger Journals and Supporting Reference Data !! Supporting Reference with Balances !! User Transaction Identifiers !! Draft Accounting !! Foreign Currency Transaction Accounting !! User Transaction Identifier Addition !! Accounting Rule change and its Impact !! Event Modeling v/s Pass through Journal Entries !! Other FAH capabilities like Import Export and Copy application definitions
Integration Challenges (Non FAH World)

Source System 1
Source System 2
Source System 3 Oracle General Ledger
Source System 4
Black Box
(Rules, Mappings, Acct Derivations etc.)
Source System n

!! Entire Intelligence of generating the Accounting entries is hidden !! The Flow is One-Directional !! Complete Audit trail is not possible !! System is not Flexible !! No Standardization !! System is not Scalable !! Reusability is very Limited !! Reconciliation Issues
Not Capable for Multi GAAP Accounting
!! Lack of confidence in the Financial Figures !! High Cost of Maintenance
Reclassification of Journal Entries after Journals are created in GL

7 Copyright 2011 Fujitsu America, Inc.

!! Big IT Project !! Testing Cycles are huge !! Integration is time consuming !! Increased Manual Intervention !! Addition to the Black Box !! Intelligence still hidden
New System Integration
!! Increased Lack of confidence in the financial figures
FAH Solution Offerings

!! Single Source of Accounting Truth
Centralized Accounting Rules Centralized Accounting Repository Maintains configurable, detailed Information Contextual transaction information for reconciliation Quickly update Accounting Rules
Loans System
Deposits
Financial Accounting Hub
General Ledger Analytics Reporting
Payments
Multiple GAAP representation Drill down from GL to FAH to Source System Configurable Supporting Reference Balances Intuitive User Interface for Business Analyst Inbuilt Validations, Error Handling, Version Control
FAH Solution Offerings

!! Multiple Accounting Representation
Primary Ledger (US GAAP) Secondary Ledger (IFRS)
US GAAP Subledger Accounting Method
IFRS Subledger Accounting Method
US GAAP Application Accounting Definition
Financial Accounting Hub
IFRS Application Accounting Definition
Accounting Event
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FAH Whats not in it

!! Data Extraction !! Event Creation !! Calculation Engine for Source System calculations !! Inbuilt Intelligence for IFRS Accounting or any GAAP Accounting
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Financial Accounting Hub Process Overview
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Accounting Method Builder

Accounting Method Builder (Building Accounting Rules) Application
Event Entities Event Classes Event Types Journal Line Definition Header Assignments Journal Line Types Account Derivation Rules Line Description Supporting References
Header Description & Supporting References
System Transaction Identifiers Sources User Transaction Identifiers Transaction Objects
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Financial Accounting Hub Uptake Process
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Event Model
Event Model Sub Ledger Application
Entity Code 1
Entity Code 2
Event Class 1
Event Class 2
Event Type 1
Event Type 2
Event Model: Event Types

Entity Code 1
Entity Code 2
Event Class 1
Event Class 2
Event Type 1
Event Type 2
Event Model: Event Types

!! Lowest level of the Event Model !! Represent the business operation that can be performed on a transaction/document !! Event Types determine which Accounting Rules should be used !! Journal Information (lines, accounts, descriptions, supporting references) are associated with event types !! Provides the accurate name and description of the business event which gave rise to the subledger journal entry
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Event Model: Event Classes

Entity Code 1
Entity Code 2
Event Class 1
Event Class 2
Event Type 1
Event Type 2
Event Model: Event Classes

!! Groups accounting event types into user oriented transaction categories. (Invoice creation, Invoice Approval, Invoice Cancellation are grouped in a class called Invoices) !! Accounting definitions usually differs by Event Classes !! Transaction Objects, Sources, default assignments of accounting attributes are made at the Event Class level. !! GL Journal Categories are tied with Event Classes
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Event Model: Event Entities

Entity Code 1
Entity Code 2
Event Class 1
Event Class 2
Event Type 1
Event Type 2
Event Model: Event Entities

!! Highest level grouping of similar transactions !! Groups event classes into technical transaction model !! All underlying transactions share the same identifier (System Transaction Identifier) !! All underlying transactions share the same data structure !! Often logically corresponds to a single document used as a basis for several related transactions
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Event Model: Subledger Application

Entity Code 1
Entity Code 2
Event Class 1
Event Class 2
Event Type 1
Event Type 2
Event Model: Subledger Application

!! Partitioning of Subledger Data !! GL Journal Source is aligned at this level !! Generally this level aligns with a third party source system !! Multiple source systems can link to the same subledger application !! Application Accounting Definitions cannot be shared across applications
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Event Model: Example

Event Model Payables
Invoices
Payments
Standard Invoice
Prepayment Invoice
Credit Memo
Invoice Validation
Invoice Cancellation
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Invoice Adjustment
Implementation Road Map
Implementation Approach
Current Architecture Source System 1 Source System 2 Source System 3 Source System 4 Oracle General Ledger Future Architecture Source System 1 Source System 2 Source System 3 Source System 4 Oracle Financial Accounting Hub Oracle General Ledger
Custom Build Accounting Transformation Engine
Source System n
Source System n
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Incremental Implementation Approach
Current Architecture Source System 1 Source System 2 Source System 3 Source System 4 Oracle General Ledger
Custom Build Accounting Transformation Engine
Source System n
26

!! Introduce FAH Pass-Through System
!! Events are processed in the custom engine !! Mapping between legacy Accounts and new Accounts now handled by FAH
Incremental Approach Source System 1 Source System 2 Source System 3 Source System 4 Custom Build Accounting Transformation Engine (Light Mode) FAH Pass Through events Oracle General Ledger
!! Multi GAAP Accounting Possible !! Validations managed by FAH !! No Accounting Rules in FAH pass-through system yet. !! Accounting repository starts to get maintained !! Additional information can be introduced in FAH at this stage by UTI and supporting references !! FAH framework is introduced in the architecture
Source System n

!! Move one system to Event Based Accounting FAH Model
!! Move the accounting rules from the custom engine to FAH !! Leverage the full capabilities of the FAH transaction model
Event Based
Incremental Approach Source System 1 Source System 2 Source System 3 Source System 4 FAH Pass Through events Oracle General Ledger
!! User Transaction Identifiers and Supporting references are fully configured !! Maintain Audit trail and full drilldown functionality
Source System n
Custom Build Accounting Transformation Engine (Light Mode)
28

!! Continue moving one system at a time to the Event based Accounting FAH model
Incremental Approach Source System 1 Source System 2 Source System 3 Source System 4 FAH Pass Through events
!! Move the accounting rules from the custom engine to FAH !! Leverage the full capabilities of the FAH transaction model !! User Transaction Identifiers and Supporting references are fully configured
Event Based Oracle General Ledger
!! Maintain Audit trail and full drilldown functionality
Source System n
Custom Engine (Light Mode)
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!! All legacy systems directly integrated using Event based Accounting FAH model
!! Entire custom accounting engine can be decommissioned !! Low Risk approach !! Lessons learnt from one phase can be effectively applied to future phases thereby creating a highly efficient Financial Accounting Hub
Future Architecture Source System 1 Source System 2 Source System 3 Source System 4 Oracle Financial Accounting Hub Oracle General Ledger
Source System n
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Implementation Considerations
!! Big Bang or Incremental Implementation Approach !! How many Applications should you define !! Event Model & Transaction Objects Model !! Event Creation Mechanism (Pull or Push) !! Legacy Application Interface Strategy !! Supporting References with Balances !! Data Volume and Performance !! Security Model
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Lessons Learnt
!! Spend sufficient time for Event Modeling and Data Modeling (Transaction Object Analysis and Build) !! Document entire Transaction life cycle and each event therein !! Avoid Using Custom Sources !! Give Unique names to Source Columns across transactions !! Move mapping rules logic from custom code to FAH !! Consider Inquiry and Reporting requirements during Design phase !! Start small during design and build, but perform load testing with full volume before Go-Live !! Keep it simple, yet keep it Agile for future requirements
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Application Snapshot
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Application Snapshot
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Q&A
Anil Patil anil.patil@us.fujitsu.com
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Anil Patil anil.patil@us.fujitsu.com
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Oracle Financials Accounting Hub in The Banking Industry

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Agenda

Copyright 2011 Fujitsu America, Inc.

Global Oracle Practice

Copyright 2011 Fujitsu America, Inc.

Oracle Global Strategic Partner

Copyright 2011 Fujitsu America, Inc.

Case Study - Overview

!! Proof of Concept Engagement

Copyright 2011 Fujitsu America, Inc.

Case Study - Overview

Copyright 2011 Fujitsu America, Inc.

Integration Challenges (Non FAH World)

Source System 3 Oracle General Ledger

Copyright 2011 Fujitsu America, Inc.

Integration Challenges (Non FAH World)

!! Lack of confidence in the Financial Figures !! High Cost of Maintenance

Reclassification of Journal Entries after Journals are created in GL

Integration Challenges (Non FAH World)

!! Increased Lack of confidence in the financial figures

Copyright 2011 Fujitsu America, Inc.

FAH Solution Offerings

Financial Accounting Hub

General Ledger Analytics Reporting

FAH Solution Offerings

US GAAP Subledger Accounting Method

IFRS Subledger Accounting Method

US GAAP Application Accounting Definition

Financial Accounting Hub

IFRS Application Accounting Definition

Copyright 2011 Fujitsu America, Inc.

FAH Whats not in it

Copyright 2011 Fujitsu America, Inc.

Financial Accounting Hub Process Overview

Copyright 2011 Fujitsu America, Inc.

Accounting Method Builder

System Transaction Identifiers Sources User Transaction Identifiers Transaction Objects

Copyright 2011 Fujitsu America, Inc.

Financial Accounting Hub Uptake Process

Copyright 2011 Fujitsu America, Inc.

Event Model: Event Types

Event Model: Event Types

Copyright 2011 Fujitsu America, Inc.

Event Model: Event Classes

Event Model: Event Classes

Copyright 2011 Fujitsu America, Inc.

Event Model: Event Entities

Event Model: Event Entities

Copyright 2011 Fujitsu America, Inc.

Event Model: Subledger Application

Event Model: Subledger Application

Copyright 2011 Fujitsu America, Inc.

Event Model: Example

Implementation Road Map

Custom Build Accounting Transformation Engine

Copyright 2011 Fujitsu America, Inc.

Incremental Implementation Approach

Custom Build Accounting Transformation Engine

Copyright 2011 Fujitsu America, Inc.

Incremental Implementation Approach

Incremental Implementation Approach

Custom Build Accounting Transformation Engine (Light Mode)

Copyright 2011 Fujitsu America, Inc.

Incremental Implementation Approach