Wednesday, October 14, 2015

Sales, Order, and AR integration

Many of the organizations want to track their revenue back to the sales organizations.

It is important to ensure that the data are collected in the upstream process, and the data can be passed into the downstream process.

I am recording the integration scenarios and customizations from a high tech company I am working with.


The client is using EBS for GL, AR, and probably OM. They use ModelN for their CRM/CPQ process.

Sales Product Catalog and Item Category

One requirement from them is to capture the product catalog information from the sales perspective and the product categories from internal inventory perspective, separately. 

A system allowing the definition of multiple item categories is required.  EBS system does provide such flexibility, by defining the item categories as a key flexfield with an unlimited number of structures. However, the problem is that the data is generated in their CRM system first.   The customization they did is similar to what Fusion Apps did, by having Fusion CRM has itself own product catalog definition for grouping the same item master.


Organization Structure from Product Category

Although EBS supports the operating units and segregate the transaction processes by operating units, the high tech company I worked with actually use the product group hierarchy to link to the organization hierarchy. 

It is not a surprise for me since the autonomous divisions are typically responsible for different product lines.  By assigning the organization hierarchy to the top level of product categories, they can clearly identify the revenue management units.  The concept is similar to the profit center described in my earlier posting.

Defining the Organization Structure in GL account segment hierarchy

In addition, they also mirror their organization hierarchy in a segment hierarchy.  It is because that when they report P/L, they need to report in the same hierarchy.

Actually, since not all revenue generation activities are going through the EBS system, to get the whole picture, we need to report from the other transactions directly from GL.  The structure used in the EBS AR and EBS GL needs to be shared in order for getting the entire picture.

Use Invoice as the source for revenue reporting

Revenue is only recognized after shipping.  They did not go with complex revenue recognition rules.  The revenue reports are built directly against the AR module based on the invoice.

Sales and Order processes are too early in the life cycle for tracking revenue.

Using GL may have the more accurate numbers, but too late in the lifecycle. 

Deriving Sales Organization from Customer records

Sales organization are captured in their CRM system.

Although EBS Order can track the Sales person information and the EBS AR can be used for calculating the sales credits, the client is not using them.  I guess that the problem of the EBS model is that they are tracking sales person, not sales organization. 

I remember that there were a discussion in the architecture group several years ago when I worked on TCA and trying to integrate the Sales Group model in EBS.  The integration did not really happen.

Now for the revenue reporting purpose, AR invoices are linked to customers which are in term linked to the sales organization. Although multiple sales organizations can work on the same customer, the primary sales organization is being used.

Multiple faces of customers

This is also an interesting topic.  The customer that the sales are selling their products to, and the customer that are truly buying the products could be different.

EBS OM allows you to assign multiple parties into the transactions.  It has Sold-To, Bill-To, Ship-To, Deliver-To, etc.  I thought that they are talking about the different legal entities or divisions within the same company.

However, this scenario is different.  US sales is selling the parts to the US customers to convince that their parts are used in manufacturing process.  However, the customer may actually outsource their manufacturing to an entirely different company.  The deploying company also have the different legal presence in the country, from which the parts are made and shipped from.

The invoice is linked to the order, and the order is linked to the quote.  The customer mentioned in the quote is different from the real customer mentioned in the order and invoice.  It is important as the cost and the selection of the parts is determined during design phase.  Sales are selling the products to be accepted as the part of the design for manufacturing.

However, when they report revenues, they need to know which selling to customers captured in the CRM system and which sales organization wins the deal.

EBS is being used as it can be easily customized, not necessary for the strong OOTB features.

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