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Sharing economies go back to the caveman age when hunters-gatherers shared tools and resources on their hunts. As the modern world evolved, though, society and laws started prioritizing private ownership of resources. This became the initial mindset of enterprise companies, mostly due to technology limitations around the feasibility of sharing data.
For the past decade, the sharing economy has evolved quickly, due to advances in connectivity and platforms. Now, enterprises with divisions and offices worldwide are expecting that resources are able to be shared easily and robustly.
The requirements for sharing resources, though, has grown from simple to complex for many organizations. This raises many questions:
Global corporations have evolved shared processing models in three distinct areas to manage the growing needs of complex sharing requirements. Based on organizational needs, sharing models can be modeled in any of the following ways, or even a mix of these approaches:
Decentralized processing, or Peer-To-Peer Unit, means that everyone serves their customers within their business units. An example of this would be if all subsidiaries were running their own procure-to-pay function. All organizations before global expansion (or acquisition) start with decentralized mode.
Prior to the arrival of the internet in the mid 1990s, business systems software had to be installed at each location, on each computer separately…with no sharing at all! You can imagine the challenges maintaining and managing applications on all computers across the enterprise worldwide.
Centralized processing, or Dedicated Unit, means a central business unit serves all the business units worldwide within the enterprise. For example, all payments worldwide would be run by a central business unit, usually the headquarters.
Many large organizations have already adopted centralized processing for improved efficiencies as well as lowering costs. With the advent of Cloud Business Applications, adoption of centralized processing has become much easier.
Hybrid processing, or hierarchical model, can be especially effective when there are differences in geographies, time zones, and statutory requirements. This is where certain functions are centralized, often by a region, while other functions remain decentralized. A good example is sourcing done locally, but payments are made centrally within Europe using SEPA.
In the late 20th century, business applications had to be installed on separate computers and locations and any shared processing among them had to be manual. Even with the advent of the internet, many enterprise business applications still only had basic shared processing features. But today, many of the top cloud business applications now serve the needs of shared processing.
Oracle Cloud Applications, the leader in enterprise business applications, have evolved considerably, and can match all the requirements of shared processing globally. It includes numerous features to support shared processing structure and functions for multiple organizations, with more being added all the time.
Some of the key functions include:
Oracle Cloud Applications, for example, can fully support both centralized and decentralized business functions, meeting all legal and intercompany requirements. For example, Oracle Applications can make a centralized payment from a Business Unit (BU) for Invoices from another BU generating appropriate I/C accounting entries.
Oracle Cloud Applications come with fully configurable business units based on the particular shared service center model chosen. Functions and managed service providers can be assigned to each business unit. Business units are fully configurable (and reconfigurable) as desired to suit your business requirements.
When an organization is growing rapidly, priority should be given to architecting and organizing shared services. Designing the appropriate organizational structure for any services to be shared in the future will return considerable benefits in the long term. This also improves enterprise agility and establishes a strong foundation for future expansions and reorganization.
Is your organization ready for the growing demands of worldwide operations? Can your enterprise applications support your new and upcoming requirements? We can help answer these questions and more, and are ready to assist you in optimizing your modernization journey.