Operating a Shared Service

Center in R12 Using EBS

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Operating a Shared Service Center in R12 Using EBS

Author: Helene Abrams

Published: July 10, 2008
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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.

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Operating a Shared Service Center in R12 Using EBS

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 backoffice 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 agreement
and 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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Operating a Shared Service Center in R12 Using EBS

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. This
security model is appropriate in a business environment where local business units are solely
responsible for managing all aspects of the finance and administration functions.
Responsibilities can be associated with a single OU or with multiple OUs.
Multiple Organizations Access Control expands 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 Accounting enables 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 Sets are 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 Entities may share bank accounts over various operating units. Legal Entities may be governed
by different tax jurisdictions.
Customer and supplier bank accounts are now in the Trading Community and can be shared. (new
R12 feature)

To learn more about Release 12s Subledger Accounting, see this article.

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Operating a Shared Service Center in R12 Using EBS

Curious?
For more information, please call eprentise at 1.888.943.5363 or visit www.eprentise.com.
About eprentise
eprentise provides 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, eprentise software 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.

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