operating a shared service center

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Operating a Shared Service

Center in R12 Using EBS

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Operating a Shared Service Center in R12 Using EBS

Copyright 2014 eprentise, LLC. All rights reserved. www.eprentise.com | Page 2

2014 eprentise, LLC. All rights reserved.

eprentise is a registered trademark of eprentise, LLC.

FlexField Express and FlexField are registered trademarks of Sage Implementations, LLC.

Oracle, Oracle Applications, and E-Business Suite are registered trademarks of Oracle Corporation.

All other company or product names are used for identification only and may be trademarks of their respective owners.

Author: Helene Abrams

Published: July 10, 2008

www.eprentise.com


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This article discusses the characteristics of a Shared Service Center (SSC), the differences between centralized

operations and an SSC, and how R12 facilitates the implementation of a Shared Service Center in E-Business

Suite.

Multi-National Corporations (MNCs) with widespread global operations must treat separate (usually

location-defined) parts of their businesses differently due to local statutory requirements, taxes,

accounting methods, languages, and currencies, yet still must comply with corporate standards. The

business must manage issues around security, ownership, reporting, and control for all transactions.

For a MNC operating in 47 different countries spread across 6 continents, daily operations is a tedious

exercise that requires that each business unit operates and supports operations independently while

sharing data among other parts of the enterprise to leverage sourcing opportunities, inventory, and back-

office transactions. Implementing a SSC enables the company to significantly reduce costs by having a

central pool of employees to handle day-to-day tasks such as Procurement, Disbursement, Collections,

Fixed Assets, Tax Compliance, Training & Development, and Payroll. Instead of carrying out these tasks in

each of the 47 different countries and repeating each operation 47 times, a SSC combines similar tasks

carried out throughout the enterprise and shares the overhead cost of providing these services internally.

Offering these tasks as Shared Services enables the corporation to capitalize on the economies of scale

and scope (in the form of reduced headcount, reduced operating costs, greater service levels, greater

leveraging of resources, etc.) that come with the elimination of duplicate efforts.

Standardized business practices across the enterprise ensure that all parts of the organization conform to

practices that are consistent with corporate objectives. A Shared Service Center offers the following

benefits:

Establishes global processes and accessibility to data.

Hastens incorporation of new business units.

Establishes the right balance of centralized and decentralized functions.

Standardizes and automates processes with self-service.

Focuses on core competencies.

Assures that management everywhere is reading from the same page.

An important impact of the deployment of shared service centers is that the number of control

points in a process and the number of variations of a process are greatly reduced, dramatically

mitigating the risk of process error. The consolidation of data and processes in Shared Service

Centers also mitigates against the risk of error and of poor decision making.

Implementing a Shared Services Center is different than centralizing operations. A Shared Service Center

generally operates as a profit center providing a specified service ( i.e. billing or expense reports) for a unit

cost. A Shared Service Center might charge the entities it services a fee for every invoice that it processes.

The fees to each internal organization are usually subject to the terms of a formal service-level agreementand are based on the volume of invoices or expense reports it processes. Centralizing operations, on the

other hand, is usually associated with conglomeration of resources in a central location for the purposes

of offering services upward to executive management. Centralized services typically operate as a cost

center focused on providing centralized controls and decision making and approvals for the organization

as opposed to sharing resources and processing for different entities across worldwide operations.


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A Shared Service Center, by its nature, enforces internal controls on inappropriate processing. For

example, in traditional local operations, an invoice of one operating unit (perhaps a company in a country)

cannot be paid by a payment from a different company in a different country. This would amount to tax

fraud. By contrast, in a Shared Service Center environment, processes that allow one company to perform

services for others with appropriate intercompany accounting require that users access the data of

different companies, each complying with different local requirements.

The Oracle E-Business Suite allows you to be both locally and corporately compliant while increasing

efficiencies through Shared Service Centers. Consider an environment where the orders are taken in

several different operating units (OUs), each representing different registered companies. These OUs

segregate the orders and data appropriately. However, all of these orders can be managed from a shared

service order desk through a single Responsibility in R12 of the E-Business Suite.

Core components of the E-Business Suite architecture that support Shared Services:

Operating Units (OUs)provide a powerful security construct in the applications by creating a tight

relationship between the functions a user can perform and the data that a user can process. Thissecurity model is appropriate in a business environment where local business units are solely

responsible for managing all aspects of the finance and administration functions.

Responsibilitiescan be associated with a single OU or with multiple OUs.

Multiple Organizations Access Controlexpands the relationship between functions and data. You

can isolate your data by OU for security and local level compliance and also enable certain users and

processes to work across them. (new R12 feature)

Subledger Accountingenables transactions to be entered in compliance with local and regulatory

requirements and reported to meet corporate requirements. Each operating unit of a corporation

can enter transactions in a local currency and according to their local chart of accounts, calendar, and

accounting method. Release 12 maintains a real-time global view of the company based on the way

each OU has set up its Secondary Ledger. (new R12 feature)

Subledger Users are assigned responsibilities.A responsibility can be attached to one or more

operating units as required, using Multiple Organizations Access Control. In a Shared Service Center,

users are given access to OUs that are owned by the legal entities that the Center serves. For

example, users at an Ireland Shared Service Center will be employed by an Ireland Legal Entity and

have access to OUs that represent the United Kingdom, France, Germany, and the United States. A

shared service user with Multiple Organizations Access Control can select invoices stored in different

operating units, combine them into one bank instruction, and send them to the bank for issuance.

Ledger Setsare used to manage ledgers, including opening and closing of periods and running

reports. Ledger sets support adjustments and allocations and specifically support adjusting ledgers.

This separation of ledger data and ledger management is designed to support the creation of ledger

shared service centers and moving ledgers into sets that are centrally managed. (new R12 feature)

Legal Entitiesmay share bank accounts over various operating units. Legal Entities may be governedby different tax jurisdictions.

Customer and supplier bank accountsare now in the Trading Community and can be shared. (new

R12 feature)

To learn more about Release 12s Subledger Accounting, seethis article.
http://eprentise.com/blog/84/140-subledger-accounting-in-r12http://eprentise.com/blog/84/140-subledger-accounting-in-r12


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Curious?

For more information, please call eprentiseat 1.888.943.5363or visit www.eprentise.com.

About eprentiseeprentiseprovides transformation software products that allow growing companies to make their Oracle E-Business

Suite (EBS) systems agile enough to support changing business requirements, avoid a reimplementation and lower the

total cost of ownership of enterprise resource planning (ERP). While enabling real-time access to complete, consistent

and correct data across the enterprise, eprentisesoftware is able to consolidate multiple production instances, change

existing configurations such as charts of accounts and calendars, and merge, split or move sets of books, operating

units, legal entities, business groups and inventory organizations.

operating a shared service center

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