Oracle Fusion Applications Incentive Compensation Implementation Guide

Oracle Fusion Applications have been designed to ensure your enterprise can be modeled to meet legal and management objectives. The decisions about your implementation of Oracle Fusion Applications are affected by your:

Every enterprise has three fundamental structures, legal, managerial, and functional, that are used to describe its operations and provide a basis for reporting. In Oracle Fusion, these structures are implemented using the chart of accounts and organizations. Although many alternative hierarchies can be implemented and used for reporting, you are likely to have one primary structure that organizes your business into divisions, business units, and departments aligned by your strategic objectives.

Legal Structure

The figure above shows a typical group of legal entities, operating various business and functional organizations. Your ability to buy and sell, own, and employ comes from your charter in the legal system. A corporation is a distinct legal entity from its owners and managers. The corporation is owned by its shareholders, who may be individuals or other corporations. There are many other kinds of legal entities, such as sole proprietorships, partnerships, and government agencies.

A legally recognized entity can own and trade assets and employ people in the jurisdiction in which it is registered. When granted these privileges, legal entities are also assigned responsibilities to:

Many large enterprises isolate risk and optimize taxes by incorporating subsidiaries. They create legal entities to facilitate legal compliance, segregate operations, optimize taxes, complete contractual relationships, and isolate risk. Enterprises use legal entities to establish their enterprise's identity under the laws of each country in which their enterprise operates.

In the figure above, a separate card represents a series of registered companies. Each company, including the public holding company, InFusion America, must be registered in the countries where they do business. Each company consists of various divisions created for purposes of management reporting. These are shown as vertical columns on each card. For example, a group might have a separate company for each business in the United States (US), but have their United Kingdom (UK) legal entity represent all businesses in that country. The divisions are linked across the cards so that a business can appear on some or all of the cards. For example, the air quality monitoring systems business might be operated by the US, UK, and France companies. The list of business divisions is on the Business Axis. Each company's card is also horizontally striped by functional groups, such as the sales team and the finance team. This functional list is called the Functional Axis. The overall image suggests that information might, at a minimum, be tracked by company, business, division, and function in a group environment. In Oracle Fusion Applications, the legal structure is implemented using legal entities.

Management Structure

Successfully managing multiple businesses requires that you segregate them by their strategic objectives, and measure their results. Although related to your legal structure, the business organizational hierarchies do not need to be reflected directly in the legal structure of the enterprise. The management structure can include divisions, subdivisions, lines of business, strategic business units, and cost centers. In the figure above, the management structure is shown on the Business Axis. In Oracle Fusion Applications, the management structure is implemented using divisions and business units.

Functional Structure

Straddling the legal and business organizations is a functional organization structured around people and their competencies. For example, sales, manufacturing, and service teams are functional organizations. This functional structure is represented by the Functional Axis in the figure above. You reflect the efforts and expenses of your functional organizations directly on the income statement. Organizations must manage and report revenues, cost of sales, and functional expenses such as research and development (R&D) and selling, general, and administrative (SG&A) expenses. In Oracle Fusion Applications, the functional structure is implemented using departments and organizations, including sales, marketing, project, cost, and inventory organizations.

Enterprise Structures Business Process Model: Explained

In Oracle Fusion Applications, the Enterprise Performance and Planning Business Process Model illustrates the major implementation tasks that you perform to create your enterprise structures. This process model includes the Set Up Enterprise Structures business process, which consist of implementation activities that span many product families. Information Technology is a second Business Process Model which contains the Set Up Information Technology Management business process. Define Reference Data Sharing is one of the activities in this business process and is important in the implementation of the enterprise structures. This activity creates the mechanism to share reference data sets across multiple ledgers, business units, and warehouses, reducing the administrative burden and decreasing the time needed to implement.

The following figure and chart describes the Business Process Model structures and activities.

BPM Activities	Description
Define Enterprise	Define the enterprise to capture the name of the deploying enterprise and the location of the headquarters. There is normally a single enterprise organization in a production environment. Multiple enterprises are defined when the system is used to administer multiple customer companies, or when you choose to set up additional enterprises for testing or development.
Define Enterprise Structures	Define enterprise structures to represent an organization with one or more legal entities under common control. Define internal and external organizations to represent each area of business within the enterprise.
Define Legal Jurisdictions and Authorities	Define information for governing bodies that operate within a jurisdiction.
Define Legal Entities	Define legal entities and legal reporting units for business activities handled by the Oracle Fusion Applications.
Define Business Units	Define business units of an enterprise to allow for flexible implementation, to provide a consistent entity for controlling and reporting on transactions, and to be an anchor for the sharing of sets of reference data across applications.
Define Financial Reporting Structures	Define financial reporting structures, including organization structures, charts of accounts, organizational hierarchies, calendars, currencies and rates, ledgers, and document sequences which are used in organizing the financial data of a company.
Define Chart of Accounts	Define chart of accounts including hierarchies and values to enable tracking of financial transactions and reporting at legal entity, cost center, account, and other segment levels.
Define Ledgers	Define the primary accounting ledger and any secondary ledgers that provide an alternative accounting representation of the financial data.
Define Accounting Configurations	Define the accounting configuration that serves as a framework for how financial records are maintained for an organization.
Define Facilities	Define inventory, item, and cost organizations. Inventory organizations represent facilities that manufacture or store items. The item master organization holds a single definition of items that can be shared across many inventory organizations. Cost organizations group inventory organizations within a legal entity to establish the cost accounting policies.
Define Reference Data Sharing	Define how reference data in the applications is partitioned and shared.

Note

There are product specific implementation activities that are not listed here and depend on the applications you are implementing. For example, you can implement Define Enterprise Structures for Human Capital Management, Project Management, and Sales Management.

Global Enterprise Configuration: Points to Consider

Start your global enterprise structure configuration by discussing what your organization's reporting needs are and how to represent those needs in the Oracle Fusion Applications. Consider deployment on a single instance, or at least, on as few instances as possible, to simplify reporting and consolidations for your global enterprises. The following are some questions and points to consider as you design your global enterprise structure in Oracle Fusion.

Enterprise Configuration

What is the level of configuration needed to achieve the reporting and accounting requirements? What components of your enterprise do you need to report on separately? Which components can be represented by building a hierarchy of values to provide reporting at both detail and summary levels? Where are you on the spectrum of centralization versus decentralization?

Business Unit Management

What reporting do I need by business unit? How can you set up your departments or business unit accounts to achieve departmental hierarchies that report accurately on your lines of business? What reporting do you need to support the managers of your business units, and the executives who measure them? How often are business unit results aggregated? What level of reporting detail is required across business units?

Security Structure

What level of security and access is allowed? Are business unit managers and the people that report to them secured to transactions within their own business unit? Are the transactions for their business unit largely performed by a corporate department or shared service center?

Compliance Requirements

How do you comply with your corporate external reporting requirements and local statutory reporting requirements? Do you tend to prefer a corporate first or an autonomous local approach? Where are you on a spectrum of centralization, very centralized or decentralized?

Modeling Your Enterprise Management Structure in Oracle Fusion: Example

This example uses a fictitious global company to demonstrate the analysis that can occur during the enterprise structure configuration planning process.

Scenario

Your company, InFusion Corporation, is a multinational conglomerate that operates in the United States (US) and the United Kingdom (UK). InFusion has purchased an Oracle Fusion enterprise resource planning (ERP) solution including Oracle Fusion General Ledger and all of the Oracle Fusion subledgers. You are chairing a committee to discuss creation of a model for your global enterprise structure including both your US and UK operations.

InFusion Corporation

InFusion Corporation has 400 plus employees and revenue of $120 million. Your product line includes all the components to build and maintain air quality monitoring (AQM) systems for homes and businesses. You have two distribution centers and three warehouses that share a common item master in the US and UK. Your financial services organization provides funding to your customers for the start up costs of these systems.

Analysis

The following are elements you need to consider in creating your model for your global enterprise structure.

Global Enterprise Structure Model

The following figure and table summarize the model that your committee has designed and uses numerical values to provide a sample representation of your structure. The model includes the following recommendations:

In this chart, the green globe stands for mandatory and gold globe stands for optional setup. The following statements expand on the data in the chart.

Note

Some Oracle Fusion Human Capital Management (HCM) and Customer Relationship Management (CRM) implementations do not require recording of accounting transactions and therefore, do not require implementation of a ledger.

Note

The InFusion Corporation is a legal entity but is not discussed in this example.

Define Initial Configuration

Establishing Enterprise Structures Using the Enterprise Structures Configurator: Explained

The Enterprise Structures Configurator is an interview-based tool that guides you through the process of setting up a basic enterprise structure. By answering questions about your enterprise, the tool creates a structure of divisions, legal entities, business units, and reference data sets that reflects your enterprise structure. After you create your enterprise structure, you also follow a guided process to determine whether or not to use positions, and whether to set up additional attributes for jobs and positions. After you define your enterprise structure and your job and position structures, you can review them, make any necessary changes, and then load the final configuration.

This figure illustrates the process to configure your enterprise using the Enterprise Structures Configurator.

To be able to use the Enterprise Structures Configurator, you must select the Enterprise Structures Guided Flow feature within the offerings in the Functional Setup Manager (FSM). If you do not select this feature, then you must set up your enterprise structure using individual tasks provided elsewhere in the offerings, and you cannot create multiple configurations to compare different scenarios.

Establish Enterprise Structures

To define your enterprise structures, you use the guided flow within the Establish Enterprise Structures task to enter basic information about your enterprise, such as the primary industry and the location of your headquarters. You then create divisions, legal entities, business units, and reference data sets. The Establish Enterprise Structures task enables you to create multiple enterprise configurations so that you can compare different scenarios. Until you load a configuration, you can continue to create and edit multiple configurations until you arrive at one that best suits your enterprise.

Establish Job and Position Structures

In addition to using the Establish Enterprise Structures task to create the basic structure of your enterprise, you also use a guided process to determine whether you want to use jobs only, or jobs and positions. The primary industry that you select in the Establish Enterprise Structures task provides the application with the information needed to make an initial recommendation. You can either accept the recommendation, or you can answer additional questions about how you manage people in your enterprise, and then make a selection. After you select whether to use jobs or positions, the guided process prompts you to set up a descriptive flexfield structure for jobs, and for positions if you have chosen to use them. Descriptive flexfields enable you to capture additional information when you create jobs and positions.

Review Configuration

After you create enterprise configurations and job and position structures, you can review a summary of the results of the two interview processes. For each configuration, the online summary lists the divisions, legal entities, business units, reference data sets, and job and position structures that the application will create when you load the configuration.

For a more detailed analysis of a configuration, you can access the Technical Summary Report. This report lists the same information as the online summary, but also lists the following information that will be created by the application when you load the configuration, based on your configuration:

The Technical Summary report also lists the default settings that will be loaded for these fields, which you access from the Manage Enterprise HCM Information task: Worker Number Generation, Employment Model and Allow Employment Terms Override. You can print the Technical Summary Report for each of your configurations and compare each scenario.

Load Configuration

You can load only one configuration. When you load a configuration, the application creates the divisions, legal entities, business units, and so on. After you load the configuration, you then use individual tasks to edit, add, and delete enterprise structures.

Designing an Enterprise Configuration: Example

This example illustrates how to set up an enterprise based on a global company operating mainly in the US and the UK with a single primary industry.

Scenario

InFusion Corporation is a multinational enterprise in the high technology industry with product lines that include all the components that are required to build and maintain air quality monitoring (AQM) systems for homes and businesses. Its primary locations are in the US and the UK, but it has smaller outlets in France, Saudi Arabia, and the United Arab Emirates (UAE).

Enterprise Details

In the US, InFusion employs 400 people and has a company revenue of $120 million. Outside the US, InFusion employs 200 people and has revenue of $60 million.

Analysis

InFusion requires three divisions. The US division will cover the US locations. The Europe division will cover the UK and France. Saudi Arabia and the UAE will be covered by the Middle East division.

InFusion requires legal entities with legal employers, payroll statutory units, tax reporting units, and legislative data groups for the US, UK, France, Saudi Arabia, and UAE, in order to employ and pay its workers in those countries.

InFusion requires a number of departments across the enterprise for each area of business, such as sales and marketing, and a number of cost centers to track and report on the costs of those departments.

InFusion requires business units for human capital management (HCM) purposes. Infusion has general managers responsible for business units within each country. Those business units may share reference data. Some reference data can be defined within a reference data set that multiple business units may subscribe to. Business units are also required for financial purposes. Financial transactions are always processed within a business unit.

Resulting Enterprise Configuration

Based on this analysis, InFusion requires an enterprise with multiple divisions, ledgers, legal employers, payroll statutory units, tax reporting units, legislative data groups, departments, cost centers, and business units.

This figure illustrates the enterprise configuration that results from the analysis of InFusion Corporation.

Division: Explained

Managing multiple businesses requires that you segregate them by their strategic objectives and measure their results. Responsibility to reach objectives can be delegated along the management structure. Although related to your legal structure, the business organizational hierarchies do not need to reflect directly the legal structure of the enterprise. The management entities and structure can include divisions and subdivisions, lines of business, and other strategic business units, and include their own revenue and cost centers. These organizations can be included in many alternative hierarchies and used for reporting, as long as they have representation in the chart of accounts.

Divisions

A division refers to a business oriented subdivision within an enterprise, in which each division organizes itself differently to deliver products and services or address different markets. A division can operate in one or more countries, and can be comprised of many companies or parts of different companies that are represented by business units.

A division is a profit center or grouping of profit and cost centers, where the division manager is responsible for attaining business goals including profit goals. A division can be responsible for a share of the company's existing product lines or for a separate business. Managers of divisions may also have return on investment goals requiring tracking of the assets and liabilities of the division. The division manager reports to a top corporate executive.

By definition a division can be represented in the chart of accounts. Companies may choose to represent product lines, brands, or geographies as their divisions: their choice represents the primary organizing principle of the enterprise. This may coincide with the management segment used in segment reporting.

Oracle Fusion Applications supports a qualified management segment and recommends that you use this segment to represent your hierarchy of business units and divisions. If managers of divisions have return on investment goals, make the management segment a balancing segment. Oracle Fusion applications allows up to three balancing segments. The values of the management segment can be comprised of business units that roll up in a hierarchy to report by division.

Historically, divisions were implemented as a node in a hierarchy of segment values. For example, Oracle E-Business Suite has only one balancing segment, and often the division and legal entity are combined into a single segment where each value stands for both division and legal entity.

Use of Divisions in Oracle Fusion Human Capital Management (HCM)

Divisions are used in HCM to define the management organization hierarchy, using the generic organization hierarchy. This hierarchy can be used to create organization based security profiles.

Legal Entities: Explained

A legal entity is a recognized party with rights and responsibilities given by legislation.

Legal entities have the right to own property, the right to trade, the responsibility to repay debt, and the responsibility to account for themselves to regulators, taxation authorities, and owners according to rules specified in the relevant legislation. Their rights and responsibilities may be enforced through the judicial system. Define a legal entity for each registered company or other entity recognized in law for which you want to record assets, liabilities, and income, pay transaction taxes, or perform intercompany trading.

A legal entity has responsibility for elements of your enterprise for the following reasons:

The Role of Your Legal Entities

In configuring your enterprise structure in Oracle Fusion Applications, you need to understand that the contracting party on any transaction is always the legal entity. Individual legal entities own the assets of the enterprise, record sales and pay taxes on those sales, make purchases and incur expenses, and perform other transactions.

Legal entities must comply with the regulations of jurisdictions, in which they register. Europe now allows for companies to register in one member country and do business in all member countries, and the US allows for companies to register in one state and do business in all states. To support local reporting requirements, legal reporting units are created and registered.

You are required to publish specific and periodic disclosures of your legal entities' operations based on different jurisdictions' requirements. Certain annual or more frequent accounting reports are referred to as statutory or external reporting. These reports must be filed with specified national and regulatory authorities. For example, in the United States (US), your publicly owned entities (corporations) are required to file quarterly and annual reports, as well as other periodic reports, with the Securities and Exchange Commission (SEC), who enforces statutory reporting requirements for public corporations.

Individual entities privately held or held by public companies do not have to file separately. In other countries, your individual entities do have to file in their own name, as well as at the public group level. Disclosure requirements are diverse. For example, your local entities may have to file locally to comply with local regulations in a local currency, as well as being included in your enterprise's reporting requirements in different currency.

A legal entity can represent all or part of your enterprise's management framework. For example, if you operate in a large country such as the United Kingdom or Germany, you might incorporate each division in the country as a separate legal entity. In a smaller country, for example Austria, you might use a single legal entity to host all of your business operations across divisions.

Creating Legal Entities in the Enterprise Structures Configurator: Points to Consider

Using the Enterprise Structures Configurator (ESC), you can create legal entities for your enterprise automatically, based on the countries in which divisions of your business operate, or you can upload a list of legal entities from a spreadsheet.

Automatically Creating Legal Entities

If you are not certain of the number of legal entities that you need, you can create them automatically. To use this option, you first identify all of the countries in which your enterprise operates. The application opens the Map Divisions by Country page, which contains a matrix of the countries that you identified, your enterprise, and the divisions that you created. You select the check boxes where your enterprise and divisions intersect with the countries to identify the legal entities that you want the application to create. The enterprise is included for situations where your enterprise operates in a country and acts on behalf of several divisions within the enterprise and is a legal employer in a country. If you select the enterprise for a country, the application creates a country holding company.

The application automatically creates the legal entities that you select, and identifies them as payroll statutory units and legal employers. For each country that you indicated that your enterprise operates in, and for each country that you created a location for, the application also automatically creates a legislative data group.

Any legal entities that you create automatically cannot be deleted from the Create Legal Entities page within the Enterprise Structures Configurator. You must return to the Map Divisions by Country page and deselect the legal entities that you no longer want.

Example: Creating Legal Entities Automatically

InFusion Corporation is using the ESC to set up their enterprise structure. They have identified two divisions, one for Lighting, and one for Security. The Lighting division operates in Japan and the US, and the Security division operates in the UK and India.

This table represents the selections that InFusion Corporation makes when specifying which legal entities to create on the Map Divisions by Country page.

Based on the selections made in the preceding table, the ESC creates the following four legal entities:

Creating Legal Entities Using a Spreadsheet

If you have a list of legal entities already defined for your enterprise, you can upload them from a spreadsheet. To use this option, you first download a spreadsheet template, then add your legal entity information to the spreadsheet, and then upload directly to your enterprise configuration. You can export and import the spreadsheet multiple times to accommodate revisions.

Legal Entity in Oracle Fusion: Points to Consider

Oracle Fusion Applications support the modeling of your legal entities. If you make purchases from or sell to other legal entities, define these other legal entities in your customer and supplier registers, which are part of the Oracle Fusion Trading Community Architecture. When your legal entities are trading with each other, you represent both of them as legal entities and also as customers and suppliers in your customer and supplier registers. Use legal entity relationships to determine which transactions are intercompany and require intercompany accounting. Your legal entities can be identified as legal employers and therefore, are available for use in Human Capital Management (HCM) applications.

There are several decisions that need to be considered in creating your legal entities.

The Importance of Legal Entity in Transactions

All of the assets of the enterprise are owned by individual legal entities. Oracle Fusion Financials allow your users to enter legal entities on transactions that represent a movement in value or obligation.

For example, the creation of a sales order creates an obligation for the legal entity that books the order to deliver the goods on the acknowledged date, and an obligation of the purchaser to receive and pay for those goods. Under contract law in most countries, damages can be sought for both actual losses, putting the injured party in the same state as if they had not entered into the contract, and what is called loss of bargain, or the profit that would have made on a transaction.

In another example, if you revalued your inventory in a warehouse to account for raw material price increases, the revaluation and revaluation reserves must be reflected in your legal entity's accounts. In Oracle Fusion Applications, your inventory within an inventory organization is managed by a single business unit and belongs to one legal entity.

Legal Entity and Its Relationship to Business Units

A business unit can process transactions on behalf of many legal entities. Frequently, a business unit is part of a single legal entity. In most cases the legal entity is explicit on your transactions. For example, a payables invoice has an explicit legal entity field. Your accounts payables department can process supplier invoices on behalf of one or many business units.

In some cases, your legal entity is inferred from your business unit that is processing the transaction. For example, your business unit A agrees on terms for the transfer of inventory to your business unit B. This transaction is binding on your default legal entities assigned to each business unit. Oracle Fusion Procurement, Oracle Fusion Projects, and Oracle Fusion Supply Chain applications rely on deriving the legal entity information from the business unit.

Legal Entity and Its Relationship to Divisions

The division is an area of management responsibility that can correspond to a collection of legal entities. If desired, you can aggregate the results for your divisions by legal entity or by combining parts of other legal entities. Define date-effective hierarchies for your cost center or legal entity segment in your chart of accounts to facilitate the aggregation and reporting by division. Divisions and legal entities are independent concepts.

Legal Entity and Its Relationship to Ledgers

One of your major responsibilities is to file financial statements for your legal entities. Map legal entities to specific ledgers using the Oracle Fusion General Ledger Accounting Configuration Manager. Within a ledger, you can optionally map a legal entity to one or more balancing segment values.

Legal Entity and Its Relationship to Balancing Segments

Oracle Fusion General Ledger supports up to three balancing segments, Best practices recommend that one of these segments represents your legal entity to ease your requirement to account for your operations to regulatory agencies, tax authorities, and investors. Accounting for your operations means you must produce a balanced trial balance sheet by legal entity. If you account for many legal entities in a single ledger, you must:

Represent your legal entities by at least one balancing segment value. You may represent it by two or three balancing segment values if more granular reporting is required. For example, if your legal entity operates in multiple jurisdictions in Europe, you might define balancing segment values and map them to legal reporting units. You can represent a legal entity by more than one balancing segment value, do not use a single balancing segment value to represent more than one legal entity.

In Oracle Fusion General Ledger, there are three balancing segments. You can use separate balancing segments to represent your divisions or strategic business units to enable management reporting at the balance sheet level for each division or business unit. For example, use this solution to empower your business unit and divisional managers to track and assume responsibility for their asset utilization or return on investment. Using multiple balancing segments is also useful when you know at the time of implementation that you are disposing of a part of a legal entity and need to isolate the assets and liabilities for that entity.

Country	Enterprise	InFusion Lighting	InFusion Security
Japan	No	Yes	No
US	No	Yes	No
UK	No	No	Yes
India	No	No	Yes

Note

Implementing multiple balancing segments requires every journal entry that is not balanced by division or business unit, to generate balancing lines. Also, you cannot change to multiple balancing segments easily after you have begun to use the ledger because your historical data is not balanced by the new multiple balancing segments. Restating historical data must be done at that point.

To use this feature for disposal of a part of a legal entity, implement multiple balancing segments at the beginning of the legal entity's corporate life or on conversion to Oracle Fusion.

If you decided to account for each legal entity in a separate ledger, there is no requirement to identify the legal entity with a balancing segment value within the ledger.

Note

While transactions that cross balancing segments don't necessarily cross legal entity boundaries, all transactions that cross legal entity boundaries must cross balancing segments. If you make an acquisition or are preparing to dispose of a portion of your enterprise, you may want to account for that part of the enterprise in its own balancing segment even if it is not a separate legal entity. If you do not map legal entities sharing the same ledger to balancing segments, you will not be able to distinguish them using the intercompany functionality or track their individual equity.

Legal Entity and Its Relationship to Consolidation Rules

In Oracle Fusion Applications you can map legal entities to balancing segments and then define consolidation rules using your balancing segments. You are creating a relationship between the definition of your legal entities and their role in your consolidation.

Legal Entity and its Relationship to Intercompany Transactions

Use Oracle Fusion Intercompany functionality for automatic creation of intercompany entries across your balancing segments. Intercompany processing updates legal ownership within the enterprise's groups of legal entities. Invoices or journals are created as needed. To limit the number of trading pairs for your enterprise, set up intercompany organizations and assign then to your authorized legal entities. Define processing options and intercompany accounts to use when creating intercompany transactions and to assist in consolidation elimination entries. These accounts are derived and automatically entered on your intercompany transactions based on legal entities assigned to your intercompany organizations.

Intracompany trading, in which legal ownership isn't changed but other organizational responsibilities are, is also supported. For example, you can track assets and liabilities that move between your departments within your legal entities by creating departmental level intercompany organizations.

Note

In the Oracle Fusion Supply Chain applications, model intercompany relationships using business units, from which legal entities are inferred.

Legal Entity and Its Relationship to Worker Assignments and Legal Employer

Legal entities that employ people are called legal employers in the Oracle Fusion Legal Entity Configurator. You must enter legal employers on worker assignments in Oracle Fusion HCM.

Legal Entity and Payroll Reporting

Your legal entities are required to pay payroll tax and social insurance such as social security on your payroll. In Oracle Fusion Applications, you can register payroll statutory units to pay and report on payroll tax and social insurance on behalf of many of your legal entities. As the legal employer, you might be required to pay payroll tax, not only at the national level, but also at the local level. You meet this obligation by establishing your legal entity as a place of work within the jurisdiction of a local authority. Set up legal reporting units to represent the part of your enterprise with a specific legal reporting obligation. You can also mark these legal reporting units as tax reporting units if the legal entity must pay taxes as a result of establishing a place of business within the jurisdiction.

Business Units: Explained

A business unit is a unit of an enterprise that performs one or many business functions that can be rolled up in a management hierarchy. A business unit can process transactions on behalf of many legal entities. Normally, it will have a manager, strategic objectives, a level of autonomy, and responsibility for its profit and loss. Roll business units up into divisions if you structure your chart of accounts with this type of hierarchy. In Oracle Fusion Applications, you assign your business units to one primary ledger. For example, if a business unit is processing payables invoices they will need to post to a particular ledger. This assignment is mandatory for your business units with business functions that produce financial transactions.

In Oracle Fusion Applications, use business unit as a securing mechanism for transactions. For example, if you run your export business separately from your domestic sales business, secure the export business data to prevent access by the domestic sales employees. To accomplish this security, set up the export business and domestic sales business as two separate business units.

Business units process transactions using reference data sets that reflect your business rules and policies and can differ from country to country. With Oracle Fusion Application functionality, you can choose to share reference data, such as payment terms and transaction types, across business units, or you can choose to have each business unit manage its own set depending on the level at which you wish to enforce common policies.

In countries where gapless and chronological sequencing of documents is required for subledger transactions, define your business units in alignment with your ledger definition, because the uniqueness of sequencing is only ensured within a ledger. In these cases, define a single ledger and assign one legal entity and business unit.

Brief Overview of Business Unit Security

Business units are used by a number of Oracle Fusion Applications to implement data security. You assign data roles to your users to give them access to data in business units and permit them to perform specific functions on this data. When a business function is enabled for a business unit, the application can trigger the creation of data roles for this business unit base on the business function's related job roles.

For example, if a payables invoicing business function is enabled, then it is clear that there are employees in this business unit that perform the function of payables invoicing, and need access to the payables invoicing functionality. Therefore, based on the correspondence between the business function and the job roles, appropriate data roles are generated automatically. Use Human Capital Management (HCM) security profiles to administer security for employees in business units.

Creating Business Units in the Enterprise Structures Configurator: Points to Consider

Business units are used within Oracle Fusion applications for management reporting, processing of transactions, and security of transactional data. Using the Enterprise Structures Configurator (ESC), you create business units for your enterprise either automatically or manually.

Automatically Creating Business Units

To create business units automatically, you must specify the level at which to create business units. Business units within your enterprise may be represented at the business function level, such as Sales, Consulting, Product Development, and so on, or they may be represented at a more detailed level, where a business unit exists for each combination of countries in which you operate and the functions in those countries.

Select the option that best meets your business requirements, but consider the following:

After you select a business unit level, the application generates a list of business units, and you select the ones you want the application to create. If you select a level that has two components, such as country and division, then the system displays a table listing both components, and you select the check boxes at the intersections of the components.

The business units listed by the application are suggestions only, and are meant to simplify the process to create business units. You are not required to select all of the business units suggested. When you navigate to the next page in the ESC guided flow, which is the Manage Business Units page, you cannot delete any of the business units that were created automatically. You must return to the Create Business Units page and deselect any business units that you no longer want.

Example: Selecting Business Unit Levels

InFusion Corporation is using the Enterprise Structures Configurator to set up their enterprise structure. They have identified two divisions, one for Lighting, and one for Security. They operate in four countries: US, UK, Japan, and India, and they have created a legal entity for each of the countries. The sales and marketing functions are based in both India and Japan, while the US and the UK have only the sales function.

The following table lists the options for business unit levels and the resulting business units that the application suggests for InFusion Corporation.

Manually Creating Business Units

If none of the levels for creating business units meets your business needs, you can create business units manually, and you create them on the Manage Business Units page. If you create business units manually, then no reference data sets are created automatically. You must create them manually as well.

Reference Data Sets and Sharing Methods: Explained

Oracle Fusion Applications reference data sharing feature is also known as SetID. The reference data sharing functionality supports operations in multiple ledgers, business units, and warehouses, thereby reducing the administrative burden and decreasing the time needed to implement new business units. For example, you can share sales methods, transaction types, or payment terms across business units or selected other data across asset books, cost organizations, or project units.

The reference data sharing features use reference data sets to which reference data is assigned. The reference data sets group assigned reference data. The sets can be understood as buckets of reference data assigned to multiple business units or other application components.

Reference Data Sets

You begin this part of your implementation by creating and assigning reference data to sets. Make changes carefully as changes to a particular set will affect all business units or application components using that set. You can assign a separate set to each business unit for the type of object that is being shared. For example, assign separate sets for payment terms, transaction types, and sales methods to your business units.

Your enterprise can decide that some aspects of corporate policy should affect all business units and leave other aspects to the discretion of the business unit manager. This allows your enterprise to balance autonomy and control for each business unit. For example, if your enterprise holds business unit managers accountable for their profit and loss, but manages working capital requirements at a corporate level, you can let managers define their own sales methods, but define payment terms centrally. In this case, each business unit would have its own reference data set for sales methods, and there would be one central reference data set for payment terms assigned to all business units.

The reference data sharing is especially valuable for lowering the cost of setting up new business units. For example, your enterprise operates in the hospitality industry. You are adding a new business unit to track your new spa services. The hospitality divisional reference data set can be assigned to the new business unit to quickly setup data for this entity component. You can establish other business unit reference data in a business unit specific reference data set as needed

Reference Data Sharing Methods

There are variations in the methods used to share data in reference data sets across different types of objects. The following list identifies the methods:

Note: Oracle Fusion Applications contains a reference data set called Enterprise. Define any reference data that affects your entire enterprise in this set.

Business Units and Reference Data Sets: How They Work Together

Reference data sharing is a feature within Oracle Fusion that enables you to group set-enabled reference data such as jobs or grades so that the data can be shared across different parts of the organization. Sets also enable you to filter reference data at the transaction level so that only data that has been assigned to certain sets is available to select. To filter reference data, Oracle Fusion Human Capital Management (HCM), applications use the business unit on the transaction. To set up reference data sharing in Oracle Fusion HCM, you create business units and sets, and then assign the sets to the business units.

Common Set Versus Specific Sets

Some reference data in your organization may be considered global, and should therefore be made available for use within the entire enterprise. You can assign this type of data to the Common Set, which is a predefined set. Regardless of the business unit on a transaction, reference data that has been assigned to the Common Set will always be available, in addition to the reference data that has been assigned to the set that corresponds to the business unit on the transaction.

Other types of reference data may be specific to certain business units, so you want to restrict the use of the data to those business units. In this case, you can create sets specifically for this type of data, and assign the sets to the business units.

Business Unit Set Assignment

When you assign reference data sets to business units, you assign a default reference data set that will be used for all reference data types for that business unit. You can override the set assignment for one or more data types.

Example: Assigning Sets to Business Units

InFusion Corporation has two divisions: Lighting and Security, and the divisions each have two locations. Each location has one or more business functions.

When deciding how to create business units, InFusion decides to create them using the country and business function level. Therefore, they created the following business units:

Because locations, departments, and grades are specific to each business unit, InFusion does not want to share these types of reference data across business units. They will create a reference data set for each business unit so that data of those types can be set up separately. Because the jobs in the Sales business function are the same across many locations, InFusion decides to create one additional set called Jobs and they will override the set assignment for the Jobs reference data group and assign it to the Jobs set. Based on these requirements, they create the following sets:

When setting up grades, departments, and locations for the business units, InFusion will assign the data to the default set for each business unit. When setting up jobs, they will assign the Jobs set and will assign the Common Set to any jobs that may be used throughout the entire organization.

When using grades, departments, and locations at the transaction level, users will be able to select data from the set that corresponds to the business unit that they enter on the transaction, and any data that was assigned to the Common Set. For example, for transactions for the Marketing_Japan business unit, grades, locations, and departments from the Mktg_Japan_Set will be available to select, as well as from the Common Set.

When using jobs at the transaction level, users will be able to select jobs from the Jobs set and from the Common Set when they enter one of the Sales business units on the transaction. For example, when a manager hires an employee for the Sales_India business unit, the list of jobs will be filtered to show jobs from the Jobs set and from the Common Set.

The following figure illustrates what sets of jobs can be accessed when a manager creates an assignment for a worker.

Creating Reference Data Sets in the Enterprise Structures Configurator: Explained

If you created business units automatically, then the Enterprise Structures Configurator automatically creates reference data sets for you. The Enterprise Structures Configurator creates one reference data set for each business unit. You can add additional sets, but you cannot delete any of the sets that were created automatically.

Common Set

The common set is a predefined set that enables you to share reference data across business units. When you select set-enabled data at the transaction level, the list of values includes data in both the common set and the set associated with the data type for the business unit on the transaction. For example, when you create an assignment, the list of values for grades will include both grades in the common set and in the set that is assigned to grades for the business unit in which you creating the assignment.

Jobs and Positions: Critical Choices

Jobs and positions represent roles that enable you to distinguish between tasks and the individuals who perform those tasks. The key to whether to use jobs or positions is how each is used. Positions offer a well-defined space independent of the person performing the job. Jobs are a space defined by the person. A job can be defined globally in the Common Set, whereas a position is defined within one business unit.

You can update the job and department of a position at any time. This is useful if you hire someone into a new role and want to transfer the position to another department.

During implementation, one of the earliest decisions you will make is whether to use jobs or a combination of jobs and positions. The determinants for this decision are:

Primary Industry of Your Enterprise

Primary industries and how they usually set up their workforce are listed in the table below.

Management of People

The following table displays suggestions of whether to use jobs or a combination of jobs and positions based on your industry and how you manage your employees when there is turnover.

Positions: Examples

Positions are typically used by industries that use detailed approval rules, which perform detailed budgeting and maintain head counts, or have high turnover rates.

Retail Industry

ABC Corporation has high turnover. It loses approximately 5% of their cashiers monthly. The job of cashier includes three positions: front line cashier, service desk cashier, and layaway cashier. Each job is cross trained to take over another cashier position. When one cashier leaves from any of the positions, another existing cashier from the front line, service desk or layaway can assist where needed. . But to ensure short lines and customer satisfaction, ABC must replace each cashier lost to turnover.

Since turnover is high in retail it is better for this industry to use positions. There is an automatic vacancy when an employee terminates employment. The position exists even when there are no holders. This is important if the person who leaves the company is a manager or supervisor with direct reports. All direct reports continue reporting to the position even if it is empty. You do not need to reassign these employees to another manager or supervisor; the replacement manager is assigned to the existing position.

Also, an advantage to using positions is that when you hire somebody new many of the attributes are defaulted in from the position. This speeds up the hiring process.

Health Care Industry

The hospital has a structured head count and detailed budgeting. For example, a specific number of surgeons, nurses, and interns of various types are needed. These positions need to be filled in order for the hospital to run smoothly. Use jobs and positions if you need to apply detailed head count rules.

Health care is an industry that needs to regulate employment, roles, and compensation according to strict policies and procedures. Fixed roles tend to endure over time, surviving multiple incumbents. Industries that manage roles rather than individuals, where roles continue to exist after individuals leave, typically model the workforce using positions.

Jobs: Example

Jobs are typically used without positions by service industries where flexibility and organizational change are key features.

Software Industry

For example, XYZ Corporation has a director over the departments for developers, quality assurance, and technical writers. Recently, three developers have left the company. The director decides to redirect the head count to other areas. Instead of hiring all three back into development, one person is hired to each department, quality assurance, and technical writing.

In software industries, the organization is fluid. Using jobs gives an enterprise the flexibility to determine where to use head count, because the job only exists through the person performing it. In this example, when the three developers leave XYZ Corporation, their jobs no longer exist, therefore the corporation has the flexibility to move the headcount to other areas.

Job and Position Structures: Explained

Job and position structures identify the descriptive flexfield structure that enables you to specify additional attributes that you want to capture when you define jobs and positions. Job and position attributes provide further detail to make jobs and positions more specific. You also use attributes to define the structure of your jobs and positions. You can specify attributes at the enterprise level for jobs and positions, at the business unit level for positions, and at the reference data set level for jobs. Job and position structures are optional.

Enterprise-Level Job Attributes

When you define a job, you enter a value for the name of the job. To make job names more specific, set up attributes that enable you to identify additional details about the job, such as the nature of the work that is performed or the relative skill level required for the job. If these attributes apply to all jobs within your enterprise, set up enterprise-level job attributes. Standard capabilities mean that you can use the different segments of the name to identify common jobs or job holders for analysis or compensation, or for grouping records in reports, for example, to find all jobs of a specific job type. You should not use attributes with values that change regularly, for example, salary ranges or expense approval levels that change every year.

This figure illustrates how job type and job level provide further details for the HR Application Specialist job.

Enterprise-Level Position Attributes

Position attributes at the enterprise level are similar to those for jobs. Each position that you define identifies a specific role in the enterprise, which you can manage independently of the person in the position, and it will belong to one specific department or organization. The name of each position must be unique. To simplify the process of managing unique names for positions, set up enterprise-level attributes to identify separate components of the position name. For example, you can set up an attribute for position title and one for position number. When defining the attributes that make up the structure of a position name you should also consider if any of your attributes are part of the definition of a common job type. Using job types for a position can help you manage common information that applies to many different positions. For example you can define a job type of Manager.Level 1 and use this for comparison of positions across departments or lines or business, or for setting common job requirements. You can then define multiple manager type positions in your HR department, each of which has responsibility for a different management function or group.

This figure illustrates how title and position number provide further details for the manager position.

Business Unit-Level Attributes for Positions

If you have information that you want to capture for positions that is specific to each business unit, then you can define attributes at the business unit level for positions. When you create positions, these attributes appear in addition to any enterprise-level attributes. For example, you may want to identify the sales region for all positions in the sales business unit. You can set up a text attribute called Sales Region and use it to enter the necessary information when creating positions for the sales business unit.

Reference Data Set-Level Attributes for Jobs

If you have information for jobs that applies to specific reference data sets, set up attributes for jobs at the reference data set level. When you create jobs, these attributes appear in addition to any enterprise-level attributes. For example, you may want to identify all information technology (IT) jobs within a specific set. You can set up a text attribute called Function and use it to enter IT in jobs that you create that perform an IT function within a specific set.

FAQs for Define Initial Configuration

What happens if I don't use the Enterprise Structures Configurator to set up my enterprise structures?

The Enterprise Structures Configurator is an interview-based tool that guides you through setting up divisions, legal entities, business units, and reference data sets. The tool also enables you to assign reference data sets to business units and locations. You can set up multiple configurations to perform what-if scenarios, and then print each configuration to compare the resulting enterprise structure. If you do not use the Enterprise Structures Configurator, then you must set up your enterprise structure using the individual tasks that correspond to each enterprise component. In addition, you will not be able to set up multiple configurations and compare different scenarios. It is recommended that you use the Enterprise Structures Configurator.

What's an ultimate holding company?

The legal entity that represents the top level in your organization hierarchy, as defined by the legal name entered for the enterprise. This designation is used only to create an organization tree, with the ultimate holding company as the top level, divisions and country holding companies as the second level, and legal employers as the third level.

What's the default reference data set?

The reference data set that is assigned to a business unit for all reference data groups, such as grades, locations, departments, and jobs. You can override the default reference data set for any reference data group.

What happens if I override the set assignment?

For the selected business unit, you can override the default reference data set for one or more reference data groups. For example, assume you have three reference data groups: Vision 1 SET, Vision 2 SET, and Vision 3 SET, where Vision SET 1 is the default set for business unit United Kingdom Vision 1 BU. You can override the default so that grades are assigned to Vision 2 SET, departments are assigned to Vision 3 SET, and jobs are assigned to the default set, Vision 3 SET.

Define Reference Data Sharing

Reference Data Sharing: Explained

Reference data sharing facilitates sharing of configuration data such as jobs and payment terms, across organizational divisions or business units. You define reference data sets and determine how the data is shared or partitioned. Use reference data sets to reduce duplication and maintenance by sharing common data across business entities where appropriate. Depending on the requirement (specific or common), each business unit can maintain its data at a central location, using a set of values either specific to it or shared by other business units.

You can share reference data after it is filtered on the basis of sets. A common reference data set is available as the default set, which can be assigned to several business units sharing the same reference data. For commonly used data such as currencies, you can use the common reference data set and assign it to multiple business units in various countries that use the same currency. In cases where the default set cannot be assigned to an entity, you can create specific sets. The data set visible on the transactional page depends on the sharing method used to share reference data.

For example, XYZ Corporation uses the same grades throughout the entire organization. Instead of managers in different business units setting up the same grades, XYZ Corporation decides to create a set called Grades and assign the grades reference data group for all business units in the organization to the Grades set, so that the grades can be shared.

Business Unit Level	Suggested Business Units
Country	US UK Japan India
Country and Division	InFusion Lighting: Japan InFusion Lighting: US Infusion Security: UK Infusion Security: India
Country and business function	Sales: Japan Marketing: Japan Sales: US Sales: UK Marketing: India Sales: India
Division	InFusion Lighting InFusion Security
Division and Legal Entity	InFusion Lighting: Japan InFusion Lighting: US Infusion Security: UK Infusion Security: India
Division and Business Function	InFusion Lighting, Sales InFusion Lighting, Marketing InFusion Security, Sales InFusion Security, Marketing
Business Function	Sales Marketing
Legal Entity	Legal Entity: Japan Legal Entity: US Legal Entity: UK Legal Entity India
Legal Entity and Business Function	Legal Entity: Japan, Sales Legal Entity: Japan, Marketing Legal Entity: US, Sales Legal Entity: UK, Sales Legal Entity India, Marketing Legal Entity India, Sales

Business Unit	Default Set Assignment	Set Assignment Overrides
Sales_Japan	Sales_Japan_Set for grades, departments, and locations	Jobs set for jobs
Marketing_Japan	Mktg_Japan_Set for grades, departments, and locations	None
Sales_US	Sales_US_Set for grades, departments, and locations	Jobs set for jobs
Sales_UK	Sales_UK_Set for grades, departments, and locations	Jobs set for jobs
Marketing_India	Mktg_India_Set for grades, departments, and locations	None
Sales_India	Sales_India_Set for grades, departments, and locations	Jobs set for jobs

Primary Industry	Workforce Setup
Mining	Positions
Utilities	Positions
Manufacturing	Positions
Retail Trade	Positions
Transportation and Warehousing	Positions
Educational Services	Positions
Public Transportation	Positions
Agriculture, Forestry, Fishing, and Hunting	Jobs
Construction	Jobs
Wholesale Trade	Jobs
Information	Jobs
Finance and Insurance	Jobs
Professional, Scientific, and Technical Services	Jobs
Management of Companies and Enterprises	Jobs
Administrative and Support and Waste Management and Remediation Services	Jobs
Arts, Entertainment, and Recreation	Jobs
Accommodation and Food Services	Jobs
Other Services (Except Public Administration)	Jobs

Industry	We always replace employees by rehiring to same role	We replace the head count, but the manager can use the head count in a different job	We rehire to the same position, but the manager can request a reallocation of budget to a different post
Project (An industry that supports project-based forms of organization in which teams of specialists from both inside and outside the company report to project managers.)	Positions	Jobs	Jobs
Controlled (An industry that is highly structured in which all aspects of work and remuneration are well organized and regulated.)	Positions	Positions	Positions
Manufacturing	Positions	Jobs	Positions
Retail	Positions	Jobs	Positions
Education	Positions	Jobs	Positions
Other	Positions	Jobs	Jobs

Note

For specific information on configuring reference data sharing for a particular object or product, refer to its product documentation.

Reference Data Sets: Explained

Reference data sets are logical groups of reference data that can be accessed by various transactional entities depending on the business context. Oracle Fusion Applications contains a common reference data set as well as an enterprise set that may be used as a default set. Depending on your business requirement you can create and maintain additional reference data sets, while continuing to use the common reference data set.

Partitioning

The partitioning of reference data and creation of data sets enable you to create reference entities across tables or lookup types, and share modular information and data processing options among business units. With the help of partitioning, you can choose to create separate sets and subsets for each business unit depending upon its business requirement, or create common sets or subsets to enable sharing reference data between several business units, without the need for duplicating the reference data. Partitioning provides you the flexibility to handle the reference data in a way appropriate to your business needs.

The following figure illustrates the reference data sharing method (assignment to one set only, with common values) where the user can access the data assigned to a specific set in a particular business unit, as well as access the data assigned to the common set.

Reference Data Sets and Sharing Methods: Explained

Reference Data Sets

Reference Data Sharing Methods

There are variations in the methods used to share data in reference data sets across different types of objects. The following list identifies the methods:

Note: Oracle Fusion Applications contains a reference data set called Enterprise. Define any reference data that affects your entire enterprise in this set.

Assigning Reference Data Sets to Reference Objects: Points to Consider

You can assign the reference data sets to reference objects on the Manage Reference Data Set Assignments page. For multiple assignments, you can classify different types of reference data sets into groups and assign them to reference entity objects. The assignment takes into consideration the determinant type, determinant, and reference group, if any.

Determinant Types

The partitioned reference data is shared based on a business context setting called the determinant type. It is the point of reference used in the data assignment process. The following table lists the determinant types used in the reference data assignment.

Determinant

The determinant or determinant value is the value that corresponds to the selected determinant type. The determinant is one of the criteria for selecting the appropriate reference data set. For example, when managing set assignments for the set determinant type, Reference Data Set is the determinant type, and you would enter the corresponding set code value as the corresponding determinant value.

Reference Groups

A transactional entity may have multiple reference entities (generally considered to be setup data) that are treated in the same manner because of commonness in implementing business policies and legal rules. Such reference entities in your application are grouped into logical units called reference groups, based on the functional area and the partitioning requirements that they have in common. For example, all tables and views that define Sales Order Type details might be part of the same reference group.

Type	Description
Asset Book	Information about the acquisition, depreciation, and retirement of an asset that belongs to a ledger or a business unit.
Business Unit	The departments or organizations within an enterprise.
Cost Organization	The organization used for cost accounting and reporting on various inventory and cost centers within an enterprise.
Project Unit	A logical organization within an enterprise that is responsible for enforcing consistent project management practices.
Reference Data Set	References to other shared reference data sets.

Note

The reference groups are predefined in the reference groups table and are available for selection and assignment.

Product Specific Reference Data Sharing: Explained

Some products required special logic for reference data sharing and have implemented their own domain specific ways for sharing data.

Items and supplier sites are two such product specific reference data objects that use product specific mechanisms to share data.

Items

If you share your items across warehouses or manufacturing facilities, you can access them through a common item master. Configure one or multiple item masters for your enterprise, based your enterprise structure. A single item master is recommended because it provides simpler and more efficient maintenance. However, in rare cases, it may be beneficial to keep multiple item masters. For example, if you acquire another enterprise and need to continue to operate your lines of business separately, maintaining a second item master might be the best decision.

Suppliers Sites

You can approve particular suppliers to supply specified commodities and authorize your business units to buy from those suppliers when the need arises. For example, you might be a household cleaning products manufacturer and need dyes, plastics, and perfumes to make your products. You purchase from a central supplier 70% of your perfume supplies with an additional supplier, in reserve, from whom you purchase the remaining 30%. At the same time, each of your business units purchases plastics and dyes from the same supplier, but from different local supplier sites to save transportation costs.

To implement business unit specific supplier sites, Oracle Fusion Procurement supports a method for defining suppliers sites as owned and managed by the business unit responsible for negotiating the supplier terms. Your other business units that have a service provider relationship defined with your procurement business unit, subscribe to the supplier sites using the supplier site assignments feature. In addition, Procurement allows sharing of the following procurement data objects across business units:

FAQs for Define Reference Data Sharing

What reference data objects can be shared across business units?

The following list contains the reference data objects for the Oracle Fusion Applications that can be shared across business units and the method in which the reference data for each is shared.

What reference data objects can be shared across asset books?

The following list contains the reference data objects for Oracle Fusion Assets that can be shared across asset books and the method in which the reference data for each is shared.

What reference data objects can be shared across cost organizations?

The following list contains the reference data objects for Oracle Fusion Cost Management that can be shared across cost organizations and the method in which the reference data for each is shared.

What reference data objects can be shared across project units?

The following list contains the reference data objects for Oracle Fusion Project Foundation that can be shared across project units and the method in which the reference data for each is shared.

Define Enterprise for Incentive Compensation

Enterprise: Explained

Enterprise Defined

When implementing Oracle Fusion Applications you operate within the context of an enterprise that has already been created in the application for you. This is either a predefined enterprise or an enterprise that has been created in the application by a system administrator.

An enterprise organization captures the name of the deploying enterprise and the location of the headquarters. There is normally a single enterprise organization in a production environment. Multiple enterprises are defined when the system is used to administer multiple customer companies, for example, multiple tenants, or when a customer chooses to set up additional enterprises for testing or development.

Oracle Fusion Applications offers capabilities for multiple tenants to share the same applications instance for some human resources processes. If you offer business process outsourcing services to a set of clients, each of those clients may be represented as an enterprise within an Oracle Fusion Application instance. To support this functionality, system owned reference data such as sequences, sets, and flexfields are also defined within an enterprise.

In Oracle Fusion Applications, an organization classified as an enterprise is defined before defining any other organizations in the HCM Common Organization Model. All other organizations are defined as belonging to an enterprise.

Locations: Explained

A location identifies physical addresses of a workforce structure, such as a department or a job. You can also create locations to enter the addresses of external organizations that you want to maintain, such as employment agencies, tax authorities, and insurance or benefits carriers.

The locations that you create exist as separate structures that you can use for reporting purposes, and also in rules that determine employee eligibility for various types of compensation and benefits. You enter information about a location only once. Subsequently, when you set up other workforce structures you select the location from a list.

Location Sets

When you create a location, you must associate it with a set. Only those users who have access to the set's business unit can access the location set and other associated workforce structure sets, such as those that contain departments and jobs.

You can also associate the location to the common set so that users across your enterprise can access the location irrespective of their business unit. When users search for locations, they can see the locations that they have access to along with the locations in the common set.

FAQs for Manage Locations

Why can't I see my location in the search results?

You can search for approved locations only. Also, if you created a location in Oracle Fusion Trading Community Model, then you can't access that location from Oracle Fusion Global Human Resources. For use in Oracle Fusion HCM, you must recreate the location from the Manage Locations page.

What happens if I select a geographic hierarchy node when I'm creating or editing a location?

The calendar events that were created for the geographical node start to apply for the location and may impact the availability of worker assignments at that location. The geographical hierarchy nodes available for selection on the Locations page display from a predefined geographic hierarchy.

What happens if I inactivate a location?

Starting from the effective date that you entered, you can no longer associate the location with other workforce structures, assignments, or applications. If the location is already in use, it will continue to be available to the components that currently use it.

Define Legal Entities for Incentive Compensation

Legal Entities: Explained

A legal entity is a recognized party with rights and responsibilities given by legislation.

A legal entity has responsibility for elements of your enterprise for the following reasons:

The Role of Your Legal Entities

Legal Entity in Oracle Fusion: Points to Consider

There are several decisions that need to be considered in creating your legal entities.

The Importance of Legal Entity in Transactions

Legal Entity and Its Relationship to Business Units

Legal Entity and Its Relationship to Divisions

Legal Entity and Its Relationship to Ledgers

Legal Entity and Its Relationship to Balancing Segments

Application Name	Reference Data Object	Method of Sharing
Trading Community Model	Customer Account Relationship	Assignment to one set only, with common values
Trading Community Model	Customer Account Site	Assignment to one set only, with common values
Trading Community Model	Sales Person	Assignment to one set only, with common values
Opportunity Management	Sales Method Group	Assignment to one set only, with common values
Work Management	Assessment Templates	Assignment to one set only, with common values
Enterprise Contracts	Contract Types	Assignment to one set only, with common values
Sales	Sales Method	Assignment to one set only, with common values
Common Components	Activity Templates	Assignment to one set only, with common values
Payables	Payment Terms	Assignment to multiple sets, no common values allowed
Receivables	Accounting Rules	Assignment to one set only, with common values
Receivables	Aging Buckets	Assignment to one set only, with common values
Receivables	Auto Cash Rules	Assignment to one set only, with common values
Receivables	Collectors	Assignment to one set only, with common values
Receivables	Lockbox	Assignment to one set only, with common values
Receivables	Memo Lines	Assignment to one set only, with common values
Receivables	Payment Term	Assignment to one set only, with common values
Receivables	Remit To Address	Assignment to one set only, with common values
Receivables	Revenue Contingencies	Assignment to one set only, with common values
Receivables	Transaction Source	Assignment to one set only, with common values
Receivables	Transaction Type	Assignment to one set only, with common values
Advanced Collections	Collections Setups	Assignment to one set only, with common values
Advanced Collections	Dunning Plans	Assignment to one set only, with common values
Tax	Tax Classification Codes	Assignment to one set only, with common values
Performance Management	Performance Templates	Assignment to one set only, with common values
Human Resources	Departments	Assignment to one set only, with common values
Human Resources	Jobs	Assignment to one set only, with common values
Human Resources	Locations	Assignment to one set only, with common values
Human Resources	Grades	Assignment to one set only, with common values
Project Billing	Project and Contract Billing	Assignment to multiple sets, common values not allowed
Project Foundation	Project Accounting Definition	Assignment to one set only, no common values allowed
Project Foundation	Project Rates	Assignment to one set only, with common values
Distributed Order Orchestration	Hold Codes	Assignment to one set only, with common values
Distributed Order Orchestration	Orchestration Process	Assignment to one set only, with common values

Application Name	Reference Data Object	Method of Sharing
Assets	Bonus Rules	Assignment to one set only, no common values allowed
Assets	Depreciation Ceilings	Assignment to one set only, no common values allowed
Assets	Depreciation Methods	Assignment to one set only, with common values
Assets	Asset Descriptions	Assignment to one set only, no common values allowed
Assets	Property Types	Assignment to one set only, with common values
Assets	Prorate Conventions	Assignment to one set only, no common values allowed
Assets	Asset Queue Names	Assignment to one set only, with common values
Assets	Retirement Types	Assignment to one set only, with common values
Assets	Unplanned Types	Assignment to one set only, with common values

Application Name	Reference Data Object	Method of Sharing
Cost Management	Cost Structure	Assignment to one set only, no common values allowed

Application Name	Reference Data Object	Method of Sharing
Project Foundation	Project Definition	Assignment to multiple sets, no common values allowed
Project Foundation	Project Transaction Types	Assignment to multiple sets, no common values allowed

Note

To use this feature for disposal of a part of a legal entity, implement multiple balancing segments at the beginning of the legal entity's corporate life or on conversion to Oracle Fusion.

If you decided to account for each legal entity in a separate ledger, there is no requirement to identify the legal entity with a balancing segment value within the ledger.

Note

Legal Entity and Its Relationship to Consolidation Rules

Legal Entity and its Relationship to Intercompany Transactions

Note

In the Oracle Fusion Supply Chain applications, model intercompany relationships using business units, from which legal entities are inferred.

Legal Entity and Its Relationship to Worker Assignments and Legal Employer

Legal entities that employ people are called legal employers in the Oracle Fusion Legal Entity Configurator. You must enter legal employers on worker assignments in Oracle Fusion HCM.

Legal Entity and Payroll Reporting

Define Chart of Accounts for Enterprise Structures for Incentive Compensation

Key Flexfields: Explained

Key flexfields provide a means to capture a key such as a part number, a job code, or an account code. A key flexfield consists of one or more segments, where each segment can have a meaning.

For example, a part number 10-PEN-BLA-450 might correspond to a black pen from vendor #450 sold by division #10 (office supplies). Behind the scenes, the application uses a unique number, 13452, for this part, but the end user always see the 10-PEN-BLA-450 part number.

Key flexfields are not optional. You must configure key flexfields to ensure that your applications operate correctly. You configure and maintain key flexfield definitions with the Manage Key Flexfields task.

Architecture

When you configure a key flexfield, you define metadata about the key flexfield such as how many segments are in a structure, how many structures the flexfield uses, what value sets each segment uses, and so on. This is flexfield metadata stored in flexfield metadata tables.

Based on the flexfield metadata, actual part numbers are captured at runtime as a combination of segment values and stored in a combinations table. A combinations table contains all the segment columns for a flexfield, plus a unique ID column and a structure instance number column that differentiates multiple arrangements of the segment columns.

For example, a part number that can be comprised of multiple segments can be represented by a key flexfield. A part number key flexfield has a corresponding combinations table, where the flexfield stores a list of the complete codes, with one column for each segment of the code, together with the corresponding unique ID and structure instance number for the code. When users define a new part number or maintain existing part numbers in the parts catalog, they directly maintain rows in the combination table.

The foreign key table contains a different business entity than the combinations table. For example, the business entity in the foreign key table is order lines or invoice lines that contain foreign key references to parts for ordering and so on. Any number of foreign key tables can reference a particular entity represented by a key flexfield.

Segments and Segment Labels

A key flexfield consists of segments. Segments consist of a prompt, a short prompt, display width, a number that determines where in the sequence of a key flexfield structure the segment exists, the range type and the column name of the attribute being captured by the segment, a default value set and a label for the segment. A segment label identifies a particular segment of a key flexfield. Segment labels are defined and made available by applications development.

Applications identify a particular segment for some purpose such as security or computations. Segment name or segment order cannot reliably identify a segment because key flexfield segments can be configured to appear in any order with any prompts. A segment label functions as a tag for a segment.

For example, Oracle Fusion General Ledger needs to identify which segment in the Accounting Flexfield contains balancing information and which segment contains natural account information. General Ledger uses a segment label to determine which segment you are using for natural account information. When you define your Accounting Flexfield, you must specify which segment label apply to which segments.

Some labels must be unique, and cannot be applied to more than one segment in each structure. Other labels are required, and must be applied to at least one segment in each structure.

A segment label orients an end user's search of segments, such as the Cost Center label for all segments across key flexfields that capture a value for cost center.

Structures

A key flexfield structure definition includes the number of segments and their order.

A delimiter separates the segments when they appear to end users. The delimiter value of a structure specifies the character used to visually separate segment values when the key flexfield is displayed as a string of concatenated segments in the UI.

Tip

Choose the delimiter value of your key flexfield carefully so that it does not conflict with the flexfield data. For example, if your data frequently contains periods, such as in monetary or numeric values, do not use a period as your segment separator. Any character you expect to appear frequently in your segment values or descriptions is not a good choice for the delimiter.

If you change the configuration of a key flexfield, such as the delimiter, the change affects the previously stored key flexfields with that structure.

Each structure can have one or more segments. Thus a segment is a child of a structure. If you want to store a particular segment, such as Cost Center, in two different structures, you must define the segment separately in each structures.

Structure and Segment Instances

You can define multiple configurations of a key flexfield structure. These structure instances have the same segment structure, in the same sequence order. They differ primarily in how each segment is validated. You define a structure instance for each key flexfield and each key flexfield structure instance.

The segments in a key flexfield structure instance are segment instances. A segment instance is a segment with a specific value set assigned to it.

If a key flexfield has been registered with a tree structure, you can specify a tree code for a segment instance, where the tree code defines a hierarchical relationship between the segment values.

Combinations

A combination is a complete code, or combination of segment values that makes up the code, that uniquely identifies an object.

For example, each part number is a single combination, such as PAD-YEL-11x14 or 01-COM-876-7BG-LTN. In these combinations, the hyphen is the segment separator. If you had ten parts you would define ten combinations. A valid combination is simply an existing or new combination that can currently be used because it is not out of date or disabled, and does not violate cross-validation or security rules. A combination has different segments depending on the flexfield structure being used for that combination. Any combination is associated with only one particular flexfield structure.

Many Oracle Fusion Applications products refer to a key flexfield combination by using the name of the entity or the key flexfield itself. For example, Oracle Fusion Assets uses the asset key flexfield and refers to one of its combinations as an asset key or asset key flexfield. In another example, other Oracle Fusion Applications products including Oracle Fusion General Ledger (GL) refer to combinations of the accounting flexfield as account or GL account.

Each key flexfield has one corresponding table, known as the combinations table, where the flexfield stores a list of the complete codes, with one column for each segment of the code, together with the corresponding unique ID number (a code combination ID number or CCID) for that code. Then, other tables in the application have a column that stores just the unique ID for the code. For example, you may have a part number code, such as PAD-YEL-11x14. The Parts combinations table stores that code along with its ID, 57494. If your application allows you to take orders for parts, you might then have an Orders table that stores orders for parts. That Orders table would contain a single column that contains the part ID, 57494, instead of several columns for the complete code PAD-YEL-11x14.

Typically one combinations page maintains the key flexfield, where the key flexfield is the representation of an entity in your application. The combinations page is where you maintain individual combinations, such as part numbers.

Dynamic Combination Creation

Dynamic combination creation is the insertion of a new valid combination into a combinations table from a page other than the combinations page.

If your key flexfield or certain usages or references of the key flexfield do not permit dynamic combination creation, you may control whether dynamic combination creation is enabled for each structure instance. If enabled, a user can enter a new combination of segment values using the flexfield window from a foreign key page. For example, when entering a transaction, a GL user can enter a new expense account code combination for an account that does not yet exist. Your application creates the new account by inserting the new combination into the combinations table behind the scenes. Assuming that the new combination satisfies any existing cross-validation rules, the flexfield inserts the new combination into the combinations table, even though the combinations table is not the underlying table for the foreign key page.

Managing Key Flexfields: Points to Consider

Consider the plans for a key flexfield, security, and resulting runtime pages when configuring key flexfields.

Planning

Level Of Dynamic Combination Creation	Controlled By:
Flexfield	Application development
Each usage or reference to the key flexfield	Application development
Structure instance	Administrators and implementation consultants
Other	Administrators and implementation consultants

Caution

Do not change the number, order, and maximum length of segments once you have acquired flexfield data.

Business Intelligence

If a key flexfield is registered in the database as enabled for Oracle Business Intelligence integration, you can specify that a segment instance is BI Enabled, which makes the segment instance available for use in Oracle Business Intelligence. The BI Enabled setting is otherwise unavailable.

If you BI-enable multiple segment instances from the same key flexfield, the business components of the flexfield are flattened automatically to include a separate attribute for each of the BI enabled segment instances, even if some of them serve the same purpose in your application. You can prevent this duplication and the extra workload and complexity that result, by enabling equalization for any set of segment instances that serve the same purpose in different structure instances. Enable equalization by assigning a unique segment label to those segment instances that you wish to be equalized across structure instances. Equalized segment instances appear in the flattened flexfield as a single attribute. Segment instances that are assigned non-unique segment labels are not equalized.

Security

Within key flexfields, value set security applies to the selection of the individual segment values in the segment list of values. When selecting a key flexfield segment value from the combination table, data security allows display of only the combinations whose segment values you have access to. Applications development controls whether or not value set security rules propagate to the foreign key table. By default they do.

Runtime Pages

Application development determines the user interface (UI) pages used to render flexfields. The types of key flexfield UI pages are as follows.

A page with a foreign key reference has a base table or view that contains a foreign key reference to a combinations table with the actual flexfield segment columns. This allows manipulating rows containing code combination IDs (CCID).

A page with partial usage of a key flexfield presents segments that are defined on a product's transactional table in addition to being defined on a combinations table. In the case of a partial usage page, it is possible that only part of the configuration is visible. This allows the key flexfield to behave more like a descriptive flexfield.

A code combination maintenance page or combinations page presents the combinations table. This allows directly creating and maintaining code combinations. The combinations table contains all key flexfield segment columns and a unique ID column.

A typical application has one and only one combinations page. An application might not have a combinations page if it does not support maintenance by administrators.

A page containing a search region enables end users to select which attributes of the key flexfield view object to use as criteria to search for flexfield metadata.

For example, you can configure seven segments for the Account key flexfield. In a foreign key reference page, end users see the typical key flexfield picker with all seven segments where they can search for combinations. In a partial usage page using the same key flexfield, end users potentially could see only a single segment such as the Cost Center labeled segment, or they might see multiple segments but displayed as individual segments rather than as a picker for choosing combinations

For more information on key flexfield pages, see the Oracle Fusion Applications Developer's Guide.

Key Flexfield Structures: Explained

A key flexfield structure arranges the segments of a key so you can reuse a single key flexfield in multiple combinations of the same or a subset of segments. Multiple instances of a single structure can accommodate differences in the value sets assigned to the structure's segments.

Managing Key Flexfield Structures

All the segments defined for a key flexfield are available to be included in a key flexfield structure.

You can define as many segments as there are defined segment columns in your key flexfield combinations table.

Restriction

Be sure to add segments in the order that your key requires. Once deployed, the order cannot be changed.

Enable segments to indicate that they are in use. A flexfield does not display disabled segments in runtime.

Tip

To protect the integrity of your data, disable a segment if you have already used it to enter data.

Key Flexfield Structure Instances and Segment Instances: Explained

The instances of a key flexfield structure share the following aspects of the structure.

Differences among structure instances at the structure level include whether dynamic combination creation is allowed.

Differences among segment instances at the structure instance level include the following.

For example, you could use one group of value sets for the US and another for France.

The figure shows two structures instances for a part number structure. The structures differ in the number of segments and the segment separators used. The structure instances of a structure share all properties that are defined for the structure, but can vary in the properties defined at the structure instance or segment instance level, such as the value set assigned to the segment instances.

Query Required Segment Instances

You can designate a key flexfield segment instance as query required so that it is one of the selectively required attributes an end user can use in a key flexfield combination search. If you indicate in the Manage Key Flexfields UI page that a segment instance should be indexed, the column representing the segment must be added to the database index. This is commonly done by a database administrator (DBA).

Following deployment, the combination picker of the key flexfield displays the query required attributes as selectively required. An end user must specify at least one of the query required attributes in the search criteria. This prevents non-selective searches that could cause performance issues.

For example, if you mark the cost center and account attributes as query required and ensure that the corresponding columns in the database are indexed, an end user can search for combinations by entering cost center or account or both as a search criterion. No search is performed if an end user does not enter at least one query required attribute as search criteria.

Tip

Index the Structure Instance Number column on your combinations table to improve performance.

Dynamic Combinations

If a key flexfield supports dynamic combination creation, you can choose to enable this feature by selecting Dynamic Combination Creation Allowed. This will allow end users to enter values at runtime that produce new code combinations for the flexfield. If not enabled, new valid combinations can only be entered using the combinations table for the flexfield.

Trees

If a tree code has been defined for the value set assigned to the segment instance, and you assign the tree code to the segment instance, tree hierarchy search operations are available on the segment values.

Provided these conditions are satisfied, different segment instances that use the same value set can be assigned the same or different tree codes, meaning they use a different hierarchy definition over the same values.

Key Flexfields: Example

Scenario

When entering details for each expense, the user specifies an account to which the expense is charged.

Entering Expense Accounts

A user interface for entering expenses gives the user the option of selecting an expense account that identifies the cost center and other details needed for processing the expense.

Analysis

The expense account field is a foreign key reference to a code combination (EXPENSE_LINES.EXPENSE_ACCOUNT = ACCOUNTS.CCID).

Code Combination Table for Entering Accounts and Employees

The code combination table supports entering account information, such as for expense accounts.

The figure shows the origin in the code combination table of the account specified by the user. The code combination ID record stores the information of the key flexfield segments used to assemble the expense account based on the key flexfield configuration.

The combinations page, which is the maintenance page for the key flexfield, is for managing rows in the combination table. In this example, managing the combinations means adding or editing account numbers that adhere to the key flexfield metadata rules.

The figure shows the code combination details for the example expense account reflected in the flexfield configuration and the code combination table.

If dynamic combination creation is not enabled, then when entering an expense line, the user can only select an account that already exists in the ACCOUNTS (combinations) table. If they require an account that does not exist, they must consult with the appropriate application administrator who can add the account to the combinations table.

If dynamic combination creation is enabled, then when entering an expense line, the user can either select a pre-existing account, or type in a new account that created dynamically on the fly in the ACCOUNTS (combinations) table. Once the new combination is created, the same user can refer to it on the expense line.

When managing employee information, the user specifies the cost center that the employee belongs to. The cost center field corresponds to a single, labeled segment of the Account Key Flexfield and has metadata defined such as the allowable value set for that segment.

In this figure, instead of specifying a cost center ID reference to an account, only the Cost Center segment is used and the value is stored directly on the employee table.

Value Sets: Explained

An end user enters a value into a flexfield segment while using the application. The flexfield validates the segment against the set of valid values that you configured as a value set and assigned to the segment.

For example, you can define a required format, such as a five digit number, or a list of valid values, such as green, red, and blue.

Flexfield segments are usually validated, and typically each segment in a given flexfield uses a different value set. You can assign a single value set to more than one segment, and you can share value sets among different flexfields.

Caution

Be sure changes to a shared value set are compatible with all flexfields segments using the value set.

Validation

A segment that uses a format only value set does not present a list of valid values to users.

You can build a tree structure from the values in an independent value set whose data type is character.

Note

Adding table validated value sets to the list of available value sets available for configuration is considered a custom task.

Security

Value set security only works in conjunction with usage within flexfield segments. If a value set is used standalone, meaning outside a flexfield, value set security is not applied, but Oracle Fusion data security is enforced.

You can specify that data security be applied to the values in flexfield segments that use a value set. Based on the roles provisioned to users, data security policies determine which values of the flexfield segment end users can view or modify.

Value set security applies at the value set level. If a value set is secured, every usage of it in any flexfield is secured. It is not possible to disable security for individual usages of the same value set.

Value set security applies to independent, dependent or table-validated value sets.

Value set security applies mainly when data is being created or updated, and to key flexfield combinations tables for query purposes. Value set security does not determine which descriptive flexfield data is shown upon querying.

Security conditions defined on value sets will always use table aliases. When filters are used, table aliases are always used by default. When predicates are defined for data security conditions, make sure that the predicates will also use table aliases.

For key flexfields, the attributes in the view object that correspond to the code combination ID (CCID), structure instance number (SIN) and data set number (DSN) cannot be transient. They must exist in the database table. For key flexfields, the SIN segment is the discriminator attribute, and the CCID segment is the common attribute.

Precision and Scale

For a value set with the data type Number, you can specify the precision (maximum number of digits user can enter) or scale (maximum number of digits following the decimal point).

Usage and Deployment

The usage of a value set is the flexfields where that value set is used. The deployment status of flexfields in which the value set is used indicates the deployment status of the value set instance.

The figure shows a value set used by a segment in a key flexfield and the context segment of a descriptive flexfield.

For most value sets, when you enter values into a flexfield segment, you can enter only values that already exist in the value set assigned to that segment.

Global and context-sensitive segment require a value set. You can assign a value set to a descriptive flexfield context segment. If you specify only context values, not value sets for contexts, the set of valid values is equal to the set of context values.

Defining Value Sets: Critical Choices

Validation and usage of value sets determine where and how end users access valid values for attributes represented by flexfield segments.

Tip

As a flexfield guideline, define value sets before configuring the flexfield, because you assign value sets to each segment as you configure a flexfield.

Value Sets for Context Segments

When assigning a value set to a context segment, you can only use table-validated or independent value sets. The data type must be character and the maximum length of the values being stored must not be larger than column length of the context.

Format Only Validation

The format only validation type enables end users to enter any value, as long as it meets your specified formatting rules. That is, the value must not exceed the maximum length you define for your value set, and it must meet any format requirements for that value set.

For example, if the value set allows only numeric characters, your user could enter the value 456 (for a value set with maximum length of three or more), but could not enter the value ABC. A format only value set does not otherwise restrict the range of different values that users can enter. For numeric values, you can also specify if a numeric value should be zero filled or how may digits should follow the radix separator

Interdependent Value Sets

You cannot specify a dependent value set for a given segment without having first defined an independent value set that you apply to another segment in the same flexfield. You use a dependent value set to limit the list of values for a given segment based on the value that the end user has chosen for a related independent segment. The available values in a dependent list and the meaning of a given value depend on which value was selected for the independently validated segment.

For example, you could define an independent value set of U.S. states with values such as CA, NY, and so on. Then you define a dependent value set of U.S. cities, with values such as San Francisco and Los Angeles that are valid for the independent value CA, and New York City and Albany that are valid for the independent value NY. In the UI, only the valid cities can be selected for a given state.

Because you define a subset value set from an existing independent value set, you must define the independent value set first. End users do not need to choose a value for another segment first to have access to the subset value set.

Table Validation

Typically, you use a table-validated set when the values you want to use are already maintained in an application table (for example, a table of vendor names). Table validation allows you to enable a segment to depend upon multiple prior segments in the same context or structure.

Table-validated value sets have unique values across the table, irrespective of bind variables. The WHERE clause fragment of the value set is considered if it does not have bind variables. If it has bind variables, the assumption is that the values are unique in the value set.

Range

In the case of format, independent, or dependent value sets, you can specify a range to further limit which values are valid. You can specify a range of values that are valid within a value set. You can also specify a range validated pair of segments where one segment represents the low end of the range and another segment represents the high end of the range

For example, you might specify a range for a format-only value set with format type Number where the user can enter only values between 0 and 100. If you use a table value set, you cannot reference flexfield segments in the WHERE clause of the value set . For example, the WHERE clause cannot reference a segment or a value set.

Security

In the case of independent and dependent values, you can specify that data security be applied to the values in segments that use a value set. Based on the roles provisioned to users, data security policies determine which values of the flexfield segment end users can view or modify.

When you enable security on a table-validated value sets, the security rule that is defined is absolute and not contingent upon the bind variables (if any) that may be used by the WHERE clause of the value set. For example, suppose a table-validated value set has a bind variable to further filter the value list to x, y and z from a list of x, y, z, xx, yy, zz. The data security rule or filter written against the value set should not assume anything about the bind variables; it must assume the whole list of values is available and write the rule, for example, to allow x, or to allow y and z. By default in data security all values are denied, and show only rows to which access has been provided.

Maintenance

There is no need to define or maintain values for a table-validated or subset value set, as the values are managed as part of the referenced table or independent value set, respectively.

If your application has more than one language installed, or there is any possibility that you might install one or more additional languages for your application in the future, select Translatable. This does not require you to provide translated values now, but you cannot change this option if you decide to provide them later.

For more information about defining value sets, see the Oracle Fusion Applications Extensibility Guide.

Define Business Units for Incentive Compensation

Business Functions: Explained

A business unit can perform many business functions in Oracle Fusion Applications. Prior to Oracle Fusion Applications, operating units in Oracle E-Business Suite were assumed to perform all business functions, while in PeopleSoft, each business unit had one specific business function. Oracle Fusion Applications blends these two models and allows defining business units with one or many business functions.

Business Functions

A business function represents a business process, or an activity that can be performed by people working within a business unit and describes how a business unit is used. The following business functions exist in Oracle Fusion applications:

Although there is no relationship implemented in Oracle Fusion Applications, a business function logically indicates a presence of a department in the business unit with people performing tasks associated with these business functions. A business unit can have many departments performing various business functions. Optionally, you can define a hierarchy of divisions, business units, and departments as a tree over HCM organization units to represent your enterprise structure.

Note

This hierarchy definition is not required in the setup of your applications, but is a recommended best practice.

Your enterprise procedures can require a manager of a business unit to have responsibility for their profit and loss statement. However, there will be cases where a business unit is performing only general and administrative functions, in which case your manager's financial goals are limited to cost containment or recovering of service costs. For example, if a shared service center at the corporate office provides services for more commercially-oriented business units, it does not show a profit and therefore, only tracks its costs.

In other cases, where your managers have a responsibility for the assets of the business unit, a balance sheet can be produced. The recommended best practice to produce a balance sheet, is to setup the business unit as a balancing segment in the chart of accounts. The business unit balancing segment can roll up to divisions or other entities to represent your enterprise structure.

When a business function produces financial transactions, a business unit must be assigned to a primary ledger, and a default legal entity. Each business unit can post transactions to a single primary ledger, but it can process transactions for many legal entities.

Business Unit Hierarchy: Example

The InFusion Air Systems division further segments your business into the System Components and Installation Services subdivisions. Your subdivisions are divided by business units:

Oracle Fusion applications facilitates independent balance sheet rollups for legal and management reporting by offering up to three balancing segments. Hierarchies created using the management segment can provide the divisional results. For example, it is possible to define management segment values to correspond to business units, and arrange them in a hierarchy where the higher nodes correspond to divisions and subdivisions, as in the Infusion US Division example above.

Business Units: Explained

Brief Overview of Business Unit Security

Setting Up Incentive Compensation Business Units: Points to Consider

There are many factors that impact how you set up your incentive compensation business units for your global enterprise structure, including those dealing with incentive compensation plans as well as data security, processing, and reporting.

Incentive Compensation Plans

Incentive compensation plan factors that impact how to best configure your incentive compensation business units include commonality across the organizational hierarchy as well as quantity and complexity of plans, for example:

Oracle Fusion Incentive Compensation enables you to individualize many compensation plan values for participants, which can reduce the number of plans that you actually have to create and manage. Level of complexity also affects the quantity of plans you create, and in which business units it would be most efficient to create and maintain them.

Data Security, Processing, and Reporting

Be sure to consider how you want to constrain data access and visibility as well as incentive processing, for example:

Oracle Fusion Incentive Compensation supports processing across business units and teams. It also enables you to set a global operating currency and process incentive compensation in local currencies or using a global currency. You can introduce global sales teams and structures at any time, without changing your enterprise structure model.

Incentive Compensation Business Units by Division and Zones: Example

This example uses a fictitious global company to demonstrate business unit analysis as part of enterprise structure planning. In this scenario, you are chairing a committee to create a model for your global enterprise structure.

Enterprise Structure

You work for a multinational conglomerate that operates in 15 countries worldwide. You bought Oracle Fusion Incentive Compensation to implement as a standalone application.

You have three processing centers (Asia-Pacific, Americas, and Europe-Middle East) and two divisions:

There is no overlap of plans between the divisions. All employees report to in-region managers, there are no cross-region teams.

You want to segregate data for security purposes by division. Compensation analysts in different regional centers work on a 24 x 7 basis on paysheets for any participant worldwide in their assigned division. Both divisions and all business units use USD as the operating currency so that executives can easily review all performance and expenses.

Analysis

The following are elements to consider when creating the business units for your global enterprise structure.

Global Enterprise Structure Model

Because Oracle Fusion Incentive Compensation accommodates muticurrency processing and reporting, your committee recommends creating three separate business units.

Incentive Compensation Business Units by Region: Example

Enterprise Structure

You work for a multinational conglomerate that operates in 15 countries worldwide. You bought Oracle Fusion Incentive Compensation to implement as a standalone application.

You have three processing centers (Asia-Pacific, Americas, and Europe-Middle East) and two divisions:

There is no overlap of plans between the divisions. You uses local currency to create incentive compensation plan rate tiers and quotas, as well as to pay participants.

Employees may report to managers in different regions, who receive rollup credit. Also, employees in the Agricultural Products division may belong to sales teams with members from other regions.

You want to segregate data for security purposes by region; local analysts can work on compensation for either division, but only for participants in one region. Both divisions and all business units use local currency as the operating currency, so that executives can easily review all performance and expenses at the national level, across divisions and participants.

Analysis

The following are elements to consider when creating the business units for your global enterprise structure.

Global Enterprise Structure Model

Because Oracle Fusion Incentive Compensation accommodates cross-region rollups and teams, your committee recommends creating three separate business units.

FAQs for Manage Business Units

What's the difference between business units in Oracle E-Business Suite and Oracle Fusion Applications?

In Oracle E-Business Suite, operating units are used to determine in which ledger a given subledger transaction is accounted and to partition setup reference data, processing and security.

In Oracle Fusion Applications, enable business units with all their business functions to replace your operating units in the Oracle E-Business Suite. Oracle Fusion Applications provide the additional functionality of assigning a manager to the business unit.

What's the difference between business units in PeopleSoft and Oracle Fusion Applications?

PeopleSoft business units and Oracle E-Business Suite operating units have been combined to create the new Oracle Fusion Applications business unit functionality.

In PeopleSoft Enterprise, a business unit housed the configuration of only one business function.

A business unit can be configured for multiple business functions in Oracle Fusion Applications. The advantage is you no longer have to name multiple business units with the same name as you did in PeopleSoft Enterprise.

In PeopleSoft Enterprise, business units can be consolidated in a hierarchy. You can see the results of a single business unit or a set of business units. PeopleSoft Enterprise also allows you to produce financial statements for a business unit.

In Oracle Fusion Applications, this is accomplished by creating a business unit representation in a chart of accounts and building appropriate hierarchies.

Define Workforce Structures for Incentive Compensation

Work Day Information: Explained

Work day information defines the standard working hours for each worker assignment in the enterprise or legal employer.

Sources of Work Day Information

If a schedule has been assigned to the enterprise, legal employer, or department, work day information is taken automatically from that schedule. Otherwise, you can enter work day information for the enterprise, legal employer, and department.

Work day information can also be defined for positions. In any assignment, standard working hours are inherited from one of the following entities in this order of preference:

How Work Day Information Is Used

For assignment budgeting purposes, FTE is calculated automatically by dividing the assignment working hours by the standard working hours, which the assignment inherits from the position, department, legal employer, or enterprise. If standard working hours are not available for any of these entities, then FTE cannot be calculated. Although FTE can also be entered manually, automatic calculation of FTE is efficient for FTE reporting and promotes consistency among the various uses of FTE information.

Using Worker Numbers: Points to Consider

Every person record in the enterprise has a person number. In addition, you can allocate worker numbers to employee and contingent worker work relationships. Worker numbers are optional: they are provided primarily for Oracle E-Business Suite customers who have used employee and contingent worker numbers and want to continue using them.

Enabling Worker Numbers for the Enterprise

By default, worker numbers are not used. If you enable worker numbers for the enterprise, then each employee and contingent worker work relationship in the enterprise must have a worker number. If you do not enable worker numbers for the enterprise, they cannot be used. The decision that you make for the enterprise cannot be overridden at the legal employer level.

Selecting the Number-Generation Method

If you select manual generation, then you are recommended to define a numbering scheme to suit local requirements. For example, determine whether uniqueness within the enterprise or at the legal employer level is important, and define the numbering scheme accordingly.

If you select automatic worker-number generation, numbers can be allocated from either an enterprise sequence or a legal employer sequence. If you use a legal-employer sequence, worker numbers are not guaranteed to be unique in the enterprise. Also, they cannot be transferred outside the legal employer: if a worker leaves the enterprise and later starts a new work relationship of the same type but with a different legal employer, a new worker number is allocated to the work relationship.

Setting the Number-Generation Method for a Legal Employer

All legal employers automatically inherit the enterprise number-generation method. You can override the number-generation method at the legal employer level, as follows:

Cost Centers and Departments: Explained

A cost center represents the smallest segment of an organization for which costs are collected and reported. A department is an organization with one or more operational objectives or responsibilities that exist independently of its manager and has one or more workers assigned to it.

The following two components need to be considered in designing your enterprise structure:

Cost Centers

A cost center also represents the destination or function of an expense as opposed to the nature of the expense which is represented by the natural account. For example, a sales cost center indicates that the expense goes to the sales department.

A cost center is generally attached to a single legal entity. To identify the cost centers within a chart of accounts structure use one of these two methods:

Departments

A department is an organization with one or more operational objectives or responsibilities that exist independently of its manager. For example, although the manager may change, the objectives do not change. Departments have one or more workers assigned to them.

Note

The manager of a sales department may also be responsible for meeting the revenue targets.

The financial performance of departments is generally tracked through one or more cost centers. In Oracle Fusion Applications, departments are defined and classified as Department organizations. Oracle Fusion Human Capital Management (HCM) assigns workers to departments, and tracks the headcount at the departmental level.

The granularity of cost centers and their relationship to departments varies across implementations. Cost center and department configuration may be unrelated, identical, or consist of many cost centers tracking the costs of one department.

Department Classifications: Points to Consider

A department can be classified as a project organization, sales and marketing organization, or cost organization.

Oracle Fusion Human Capital Management (HCM) uses trees to model organization hierarchies. It provides seeded tree structures for department and other organizational hierarchies that can include organizations with any classification.

Project Organization

Classify departments as a project owning organization to enable associating them with projects or tasks. The project association is one of the key drivers for project access security.

In addition, you must classify departments as project expenditure organizations to enable associating them to project expenditure items. Both project owning organizations and project expenditure organizations can be used by Oracle Fusion Subledger Accounting to derive accounts for posting Oracle Fusion Projects accounting entries to Oracle Fusion General Ledger.

Sales and Marketing Organization

In Oracle Fusion Customer Relationship Management (CRM), you can define sales and marketing organizations. Sales organization hierarchies are used to report and forecast sales results. Sales people are defined as resources assigned to these organizations.

In some enterprises, the HCM departments and hierarchies correspond to sales organizations and hierarchies. It is important to examine the decision on how to model sales hierarchies in relationship to department hierarchies when implementing customer relationship management to eliminate any possible redundancy in the definition of the organizations.

The following figure illustrates a management hierarchy, in which the System Components Division tracks its expenses in two cost centers, Air Compressors and Air Transmission. At the department level, two organizations with a classifications of Department are defined, the Marketing Department and Sales Department. These two departments can be also identified as a Resource Organizations, which will allow assigning resources, such as sales people, and other CRM specific information to them. Each department is represented in the chart of accounts by more than one cost center, allowing for granular as well as hierarchical reporting.

Cost Organization

Oracle Fusion Costing uses a cost organization to represent a single physical inventory facility or group of inventory storage centers, for example, inventory organizations. This cost organization can roll up to a manager with responsibility for the cost center in the financial reports.

A cost organization can represent a costing department. Consider this relationship when determining the setup of departments in HCM. There are no system dependencies requiring these two entities, cost organization and costing department, be set up in the same way.

Jobs: Example

Jobs are typically used without positions by service industries where flexibility and organizational change are key features.

Software Industry

FAQs for Define Workforce Structures

What's the difference between a job set and a job family?

A job family is a group of jobs that have different but related functions, qualifications, and titles. They are beneficial for reporting. You can define competencies for job families by associating them with model profiles.

A job set is an organizational partition of jobs. For example, a job set can be global and include jobs for use in all business units, or it can be restricted to jobs for a specific country or line of business. When you select a job, for a position or an assignment, the available jobs are those in the set associated with the business unit in which you are working, and also those in the Common set.

4 Common Applications Configuration: Define Enterprise Structures for Incentive Compensation

Enterprise Structures: Overview

Legal Structure

Management Structure

Functional Structure

Enterprise Structures Business Process Model: Explained

Global Enterprise Configuration: Points to Consider

Enterprise Configuration

Business Unit Management

Security Structure

Compliance Requirements

Modeling Your Enterprise Management Structure in Oracle Fusion: Example

Scenario

InFusion Corporation

Analysis

Global Enterprise Structure Model

Define Initial Configuration

Establishing Enterprise Structures Using the Enterprise Structures Configurator: Explained

Establish Enterprise Structures

Establish Job and Position Structures

Review Configuration

Load Configuration

Designing an Enterprise Configuration: Example

Scenario

Enterprise Details

Analysis

Resulting Enterprise Configuration

Division: Explained

Divisions

Use of Divisions in Oracle Fusion Human Capital Management (HCM)

Legal Entities: Explained

The Role of Your Legal Entities

Creating Legal Entities in the Enterprise Structures Configurator: Points to Consider

Automatically Creating Legal Entities

Example: Creating Legal Entities Automatically

Creating Legal Entities Using a Spreadsheet

Legal Entity in Oracle Fusion: Points to Consider

The Importance of Legal Entity in Transactions

Legal Entity and Its Relationship to Business Units

Legal Entity and Its Relationship to Divisions

Legal Entity and Its Relationship to Ledgers

Legal Entity and Its Relationship to Balancing Segments

Legal Entity and Its Relationship to Consolidation Rules

Legal Entity and its Relationship to Intercompany Transactions

Legal Entity and Its Relationship to Worker Assignments and Legal Employer

Legal Entity and Payroll Reporting

Business Units: Explained

Brief Overview of Business Unit Security

Creating Business Units in the Enterprise Structures Configurator: Points to Consider

Automatically Creating Business Units

Example: Selecting Business Unit Levels

Manually Creating Business Units

Reference Data Sets and Sharing Methods: Explained

Reference Data Sets

Reference Data Sharing Methods

Business Units and Reference Data Sets: How They Work Together

Common Set Versus Specific Sets

Business Unit Set Assignment

Example: Assigning Sets to Business Units

Creating Reference Data Sets in the Enterprise Structures Configurator: Explained

Common Set

Jobs and Positions: Critical Choices

Primary Industry of Your Enterprise

Management of People

Positions: Examples

Retail Industry

Health Care Industry

Jobs: Example

Software Industry

Job and Position Structures: Explained

Enterprise-Level Job Attributes

Enterprise-Level Position Attributes

Business Unit-Level Attributes for Positions

Reference Data Set-Level Attributes for Jobs

FAQs for Define Initial Configuration

What happens if I don't use the Enterprise Structures Configurator to set up my enterprise structures?

What's an ultimate holding company?

What's the default reference data set?

What happens if I override the set assignment?

Define Reference Data Sharing