Tuesday, February 12, 2008

Organization Model in ERP (1)

I am interested in study how various ERP models the organizations. I have been involved in designing this functional area for several years. I feel that I want to write something about it.

SAP Company Code and Oracle E-Business Suite

SAP has the Company Code entity as part of the enterprise apps organization model. It is part of FI-Financial Accounting setup. It is defined as "The smallest organizational unit of Financial Accounting for which a complete self-contained set of accounts can be drawn up for purposes of external reporting." "You have to assign a chart of accounts to each company code." "You specify the account currency in the company code area of the G/L account master data."

Company Code in SAP is similar to Set of books, Balancing Segment Value, and Operating Unit in Oracle E-Business Suite.

It is similar to Balancing Segment Value in the way that it is the unit for which a financial statement can be generated. However, the difference is that Company Code can be set up and entered into transactions independently from the GL account, while the balancing segment values in EBS are entered as part of entering GL accounts.

From the perspective of data entry points, Company Code is similar to Operating Unit in E-Business Suite, especially under E-Business Suite Release 12. Previously, E-Business Suite does not let the users to enter the operating unit. It is always derived from the responsibility in the release 11i and before. Since the E-Business Suite release 12, the Multi-Org Access Control (MOAC) feature allows the users to switch ORG within a user responsibility, the operating unit can be the first thing the user enters before entering the transaction.

However, Operating Unit in E-Business Suite is only used by Sub-Ledger products, such as Receivables and Payables. You cannot enter a operating unit with General Ledger. Company Code in SAP, on the other hand, can be entered into the General Ledger.

The chart of accounts and functional currency is actually assigned to the Company Code. From this perspective, Company Code is also similar to Set of Books in the release 11i and before, or the Ledger in Release 12.

Another related entity exists in EBS R12 is Legal Entity. It can be seen as the bridge between sub-ledger transactional applications and the General Ledger application. A legal entity owns the financial data posted to the ledger. You can definitely generate the financial statement for a legal entity. You can find the functional currency for a legal entity from the ledger which the legal entity's transactions are posted. Legal Entity is also enterable into several documents such as Payables invoices.