By Robert D. Anderson, CPA

During the last two years, Project Partners has been approached by several firms who run Oracle Order Management and now want to implement Oracle E-Business Suite Projects applications to provide a project-level profit and loss view, as well as contract and client profitability across the firm. Generally, this request is happening at the same time the firm is undergoing massive growth, and management wants it done quickly so they can get a handle on the growth that is happening and make sure it is profitable or identify problem areas quickly so action can be taken to prevent profound impact to the overall business.

The Oracle E-Business Suite Project Management module (PJT) does not create transactions. Still, it provides several tools to allow the tracking of financial transactions that are happening in the Project Costing and Project Billing applications. In addition, it offers both direct tracking in the tool and integration with project management tools, such as Microsoft Project Standard Edition and Primavera P6, as well as an open interface to interact with other similar management and scheduling tools in the market. Since the financial, resource, and schedule information all reside in Oracle, the ability to leverage Key Performance Indicators and group them into Key Performance Areas, progress tracking, and status reporting all combine to offer a reliable tool to present the exceptions out of large volumes of data so the firm can take appropriate action at an early stage in work.

The Big Question
How do you transition from the current Order Management process to this excellent project management system?

Each firm faces unique challenges, so there is no “one size fits all” response to the question. Here are some brief examples that illustrate the potential of what can be done:

Complex Environment:  EDI/Orders/Projects/Inventory/Purchasing
This firm receives most of the inbound orders via EDI and must invoice back the same way, with matching information. Multiple EDI POs often make up a single project. Faced with very rapid growth and a business operational need to limit the addition of support staff, process automation was the operative word. The final solution leveraged existing Oracle functionally in every place possible. The high-level business flow looks like this:

• During the sales cycle, a potential new set of work is identified and communicated to the quoting team. As a result, a project is created in Oracle PJT with minimal information. Because of the overall requirements, Project Manufacturing is also part of the solution and is enabled for the project.
• An inbound EDI PO is received with the quote information/pricing. Then, the standard Oracle EDI process creates the Sales Order.
• The quoting team receives a notification and reviews the new Sales Order for correct information, identifies the right project and task information, and enters it on the Sales Order using the standard Oracle Project and Task fields enabled with Project Manufacturing. In addition, this particular Order Type has also been defined to allow other processes to happen.
• When the Sales Order is Booked, a custom process kicks off to automatically update/create the Project Agreement, create the funding tied to this specific Sales Order, update the Approved Revenue Budget for the financial task associated with the Sales Order lines, and Baseline the new Revenue Budget.
• Standard Oracle MRP processes create the demand from the Sales Order. Sourcing rules determine if the item is fulfilled from inventory or needs to be purchased specifically for the project.
• In the Warehouse, items from the inventory are identified, and a “kitting” process is initiated to pull and assemble the project “Kit,” which moves the items from a generic inventory to a project-specific inventory. Items purchased for the project are received into the project inventory location until ready to pull and ship. The project items are pulled and shipped to the job site, the cost manager completes the interface to the GL, and Project Manufacturing captures the inventory costs, creates an expenditure batch, and imports the cost into Project Costing. The project-specific purchase order costs, received into inventory, are also captured. These are all standard Oracle processes that are included with Project Manufacturing.
• Client-specific revenue rules are applied to the recognition and matching of cost and revenue using standard processes in Project Billing or a client extension/s depending on immediate cost recognition or use of WIP to hold costs until revenue is recognized.
• In this case, client invoicing leverages Order Management to control what should be invoiced. When the acceptance certificates are received, Project Controls releases/completes the Order Line associated with the acceptance. The standard Order Management to Accounts Receivable workflow contains a modification. Based on the Order Type, the workflow branches and calls a custom package. The package creates a billing event on the project, with links to the specific Order Line, for the correct value and description.
• The standard invoice processes are run in Project Billing, called a Billing Extension which creates a draft invoice that consumes the appropriate funding for the Order Line and presents the invoice for approval.
• In PJT, the invoice is reviewed and approved.
• The standard interface, Projects to Accounts Receivable, has been modified to create the appropriate invoice type in AR, pulling any EDI information required from the Sales Order/Sales Order line.
• In AR, the process is run to create an EDI Invoice, and the client is sent the appropriate EDI invoice.
• At all stages of the cycle, standard PJT functionality is available regarding KPI/KPA, status reports, programs, etc.

Simple Order Management to Projects Integration

Most firms have a more straightforward integration requirement. They leverage contract manufacturing, operate no inventory, and everything is drop shipped to the site. Variations often involve revenue/cost rules and invoice presentation format issues.

The overall conceptual flow is similar to the first presentation, except Sales Orders tend to be related to a single project. Often the desired functionality is for the Sales Order to be entered, and an automated process runs to create the project based on the Sales Order information, often using the Sales Order number as the Project Number and standard task structures contained in the project creation template, to populate the task information on the order lines. In addition, the automatic creation of the Agreement, Funding, Revenue Budget, and Baseline of the approved revenue budget often is done. A change process also must be incorporated for updates to the client PO/Sales Order.

Unlike the first example, there is no standard Oracle-provided solution to capture the costs of Purchase Orders created from the Sales Order demand. Instead, a custom process captures the cost by sales order line from the PO-related invoice process and establishes an expenditure batch in Oracle Project Costing.

Invoice processes verily considerably across firms in this situation. For example, some firms doing contractor-type work must invoice in the AIA format, such as the Project Partners UI Apps AIA Invoice solution. In contrast, others have a fixed percentage at set intervals, such as 20% upon Order Booking, material remaining 80% on shipment, and labor often after the initial acceptance with the balance after final approval. Other invoicing requirements are controlled within PJT using deliverables in the Workplan.

As in the first example, all the standard features and capabilities of PJT are available to support tracking and reporting on the exceptions promptly.

Summary and Conclusion

The Oracle E-Business Suite Projects applications provide powerful tools to capture and report against the activity flowing out of Order Management. Oracle provides some processes out of the box, and others require minimal custom workflow modifications and packages. Custom concurrent processes are necessary for some solutions to capture and load cost information into Oracle Projects. Once the data resides in the Project tables, powerful analytic tools can separate the exceptions for further review and analysis.

Using consultants who understand these capabilities and can work with your business leadership to define an overall business flow will allow your business to be more productive, scale the support functions during rapid growth and let the key areas be quickly visible for action when required. Project Partners has expert consultants to assure your success in this area.