R12 Oracle E-Business Tax – New Features

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July Ju ly 2010Volume 24, I s sue 1

By Deborah Emmett, Newsletter Director [email protected]

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BOD Update 1

SROAUG Board of Directors 1

R12 Oracle E-business Tax – New Features

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Performance Testing E-Business Suite

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Uma Mani, Consultant Architect, HP Enterprise Services Oracle Practice

INTRODUCTION

E-Business Tax is a new product of Oracle Applications in Rel12. It can be used to configure tax for Purchasing, Payables, Receivables and Sales. US Sales Tax and Use Tax can be processed using the eBTax. It has a global system architecture that is configurable for country specific tax structure. eBTax replaces the transaction tax solution of Rel 11i built into Oracle Payables and Receivables. Although eBTax is a new product customers upgrading from 11i do not have to re-implement their tax solution. They can continue using their 11i tax setup.

This paper provides information to help familiarize users with some implementation options to configure the tax setups. It also explains the features and key concepts that is required for setting up the tax engine. It will also describe the tax setup in detail with examples.

Features of E-Business tax module

E-Business tax can be used for US Sales and Use tax in Procurement.

It allows to self-assess (reverse charge) taxes on Payables invoices.

It allows you to define multiple registrations for a party or site for different taxes or jurisdiction.

It allows you to account for recoverable taxes at the time and to the extent of payment in Payables similar to 11i Receivables.

It allows tax on freight with ability to define different rules on freight.

It allows you to define exemptions specific to a regime, tax or jurisdiction for a party.

It allows you to define exemptions specific to a regime, tax or jurisdiction by a product specific classification.

It allows you to define multiple inclusive taxes as well as supporting compounding taxes and surcharges. It is nothing but tax on taxes.

It allows the use of quantity based tax rates to be unit based. For e.g $0.30 per Gallon.

E-Business tax – Key Concepts

Tax Authority

Tax authority is a government entity that administers tax law, regulates tax law, and/or audits one or more taxes. An example would be California, USA – California board of equalization.

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Tax Regime

Tax Regime is the set of tax rules that determines the treatment of one or more taxes. These taxes are administered by a tax authority. An example would be

California, USA – California Sales tax

Tax

Tax is a classification of a charge imposed by a government through a fiscal or tax authority. An example would be

Tax Regime Tax

California Sales tax State Sales tax

Tax Jurisdiction

Tax Jurisdiction is a geographic area where tax is levied. The tax is levied by a specific tax authority. An example would be

Tax

State Sales tax

New Features of E-Business tax in R12

Some of the new and enhanced features of R12 are as follows:

An entire tax setup hierarchy can be defined now in R12. You can define tax regimes, the taxes belonging to those regimes, tax status belonging to each tax and tax rates belonging to each tax status.

The tax codes, tax groups and system options are defined at the Operating Unit level. You define it for one Operating unit and it is replicated to all Operating Units.

Tax configuration ownership is at the tax regime level and is a new feature in R12

The setups can be shared across all applications, legal entities and operating units.

Instead of replicating choices for different operating units you can now define which regimes need to support recovery, exemptions, exceptions and override.

A tax is defined at the country, state, etc level to understand the hierarchy across taxes.

Tax group codes are now called as tax classification codes.

Tax group constraints have been upgraded and called as condition sets.

The conditions and exceptions for tax group are now at process result level

Recovery rate percentage is upgraded by creating recovery rate codes in the context of tax regime and tax.

Rounding rule and allow tax rounding override setup are now available in regime and tax levels.

A new profile option “Allow override of inclusive tax lines” is now available at configuration owners tax option level to help control the override for different event classes.

The offset tax functionality is only for backward compatibility purposes in R12.

From Order to Cash tax codes/groups, Regimes are upgraded to reflect cross regime compounding.

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The tax code level inclusive flag is upgraded to corresponding tax rate code and also taken to higher levels Tax Regime, Tax and Tax status.

There is also tax standard inclusive handling, standard non-inclusive handling, and special inclusive handling features.

Tax inclusiveness is at party/party site levels in addition to account/account site levels.

You can create secondary recovery type in addition to primary recovery type. You can also define rates under secondary recovery type.

For any 3rd party rounding rule and rounding level can be defined at Party tax profile.

The allow exemption flag is defined at Configuration Owner tax options. The allow tax exemptions is defined at Regime and tax levels.

The item exceptions are defined in the exceptions page flow under products tab. Exceptions can apply to items or item classifications.

There is a common single repository for tax distributions for Procure to Pay transactions. There are summary tax lines for payables transactions.

The tax repository is a single source of transactional tax information for all taxes calculated by E-Business tax. It holds information about calculated taxes, parties involved etc. The repository is also the underlying infrastructure for the creation and modification of taxes.

Tax simulator is a new tool to simulate different types of tax transactions and immediately see the results.

Tax rules belonging to multiple rule type can be defined as a step-by-step process or expert( faster) flows. The rules can be seen in a hierarchical fashion.

Creating a Regime to Rate Tax Model

We will see below how to setup the following in the below example:

1. Tax Regime

2. Tax

3. Tax Status

4. Tax Rate

5. Tax Jurisdiction

!Creating a Tax Regime

Create a tax regime based on the following:

1. Tax regime code and name

2. Regime Level

3. Country Name

4. Effective from date

5. Effective To date

Go to

Payables Manager -- > E-Business tax home Tax Configuration Create Tax Regime Create

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Enter Tax Regime Controls

Select Allow tax exemption and tax exception.

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Enter Tax Regime Defaults

Go to Configuration Options Page

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Creating a Tax

Go to Tax Configuration Create Tax

Creating a Tax Status

Navigate to the Create Tax Status page

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Creating a Tax Rate

Go to tax rate page

Enter Rate details

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Creating a Tax Jurisdiction

Navigate to the Create Tax Jurisdiction page

Uma Mani is a Consultant Architect in the HP Enterprise Services Oracle Practice. She has 12 years experience working with Oracle financials applications. Uma can be contacted by email at !"#"#$%#&'()*"#%+,&)",

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Abstract:

Performance test is a point in time snapshot of the expected workload to assess performance characteristics ofapplications, measure System resources used, and measure Transaction execution times. Performance test is alsoused to validate selected architecture, predict workload and capacity, and test architecture configuration changes. Performance and load test before going live is critical to having a system that can handle production load. However, itis often missed, not done correctly, and not included in the project plan. A successful performance and load testrequires proper planning, execution, analysis, tools, and utilities. An structured and systematic approach using OracleApplications Test Suite (OATS) is described to help customers plan their performance and load test for a successfulgo live and a sustainable system. Importance of performance test: Given below are some of the important points for considering performance test. Performance test offers following benefits:

• Understand affect of workload on performance • Reduce performance risk

• Test key on-line transactions to establish their expected performance • Verify that key batch transactions complete within a specified timeframe • Identify performance thresholds that cannot be identified in unit or system testing • Study the affects of system tuning across the application, database and operating system layers

• Establish the performance viability of a specific architecture • Predict when additional system capacity may be needed • Take corrective measures

Addressing performance issues: There are three options to address performance issues. These options along with their strength and weaknesses are given below: Option 1: Analytical Analysis Strength:

• Short timeline • Minimum resources • No hardware required • No data loading

Weakness:

• Highly inaccurate with many transactions • Difficulty adjusting for environments without sufficient history

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Deep Ram, Technical Director, eBusiness Architecture, Oracle Corporation

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Option 2: Fix it as it breaks Strength:

• Minimal up-front work • No hardware required • No resources required

Weakness:

• Users are the first to discover poor performance • Production performance problems require immediate fixes (not always possible) • Phased implementations may be delayed or halted entirely • Difficult to make architecture changes when the production system is in crisis

Option 3: Pre-production performance testing

• Simulates production • Greatly reduces risk • Provides roll out sizing

Weakness:

• Process and technical resources required • Takes time • Requires dedicated testing environment • Results dependent upon closeness of simulation to reality

It is clear that one needs to plan in advance and have all resources to conduct a successful performance test.

Tools and utilities

Oracle Application Testing Suite is very comprehensive and includes Load Testing for Applications, Functional Testing forApplications and Test Manager for Applications. We have done numerous performance test and have an in-house team specializing in performance test that can be engaged along with functional team.

Oracle Application Testing Suite is the perfect fit for achieving higher quality for internally facing enterprise applications as well as externally facing e-commerce applications. It allows organizations to maximize the quality and performance of their applications

Comprehensive solution — covers functional testing, load testing and test management

Maximize application performance for peak loads — Delivers rigorous validation that protocol-based legacy testing tools cannot provide

Reduce testing effort — Ensures functional reliability while reducing your testing effort by 50% or more

Simplify test process management — Provides integrated test management for functional and load testing but also includes defect and requirements tracking.

Intuitive Web-based interface — Enables remote access and multi-user, concurrent, collaboration

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Oracle Application Testing Suite’s also has Accelerators for Oracle E-Business Suite to provide a comprehensive solution for ensuring the quality and performance of Oracle E-Business Suite applications. The Functional Testing Accelerator for Oracle E-Business Suite extends Oracle Functional Testing to enable automated functional and regression testing of Oracle E-Business Suite applications. The Load Testing Accelerator for Oracle E-Business Suite extends Oracle Load Testing to enable load and performance testing of Oracle E-Business Suite applications. The Testing Accelerators for Oracle E-Business Suite are components of Oracle Application Testing Suite, the centerpieceof the Oracle Enterprise Manager solution for comprehensive testing of packaged, Web and service oriented architecture–based applications. The tool has very intuitive interface and offers following benefits.

Automates complex Oracle EBusiness Suite transactions for both functional testing and load testing Supports automation of both Web and Oracle Forms application interfaces and protocols Provides custom test cases to validate application content Enables parameterization of test scripts for data-driven testing Simulates loads of hundreds to tens of thousands of concurrent users while minimizing hardware requirements Gathers critical infrastructure performance metrics to identify bottlenecks under load Provides an intuitive Web based console to configure and run load tests and share real-time results with

distributed users

High level tasks

• Define scope & strategy • Define test scenarios • Define steps in scenarios • Create test scripts

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• Determine test data needed • Create and load test data • Create test database • Create test environment • Execute test • Produce report

Required resources:

• Project manager • Performance test team lead • Technical analyst • Database administrator • Application administrator • System administrator • Network administrator • Business analyst • User representative • User emulation scripting resource

Strategy:

Performance management strategy identifies and prioritizes the business critical transactions, establishes the techniques and metrics that will be used to monitoring actual performance and defines the process to identify, track and resolve problems. Developing performance testing strategy requires discovery sessions and workshops with IT, business users, DBA team, architecture team, and stake holders. Given below are high level points addressed during developing the strategy for performance testing.

Determine and document performance testing scope, objectives, milestones, and critical success factors. Identify project policies, risks, and assumptions related to the performance test

Review Initial Architecture and Application Mapping

Identify the set of critical business transactions and document their performance requirements. Identify and document any system wide or overall performance expectations or Service-Level Agreements. Study and evaluate impact of key dependencies of the performance test to other project efforts.

Validate that the technical architecture will support anticipated processing requirements during a simulated peak concurrent workload for:

Validate that the technical architecture will scale successfully to the anticipated growth rate

Validate batch processing does not adversely impact OLTP performance and visa/versa

Validate performance of key transactions from remote sites by executing those transactions by live users offset by automated virtual user to supplement the concurrent load.

Validate that the processing required to perform a financial period close can be successfully completed with the time frame requirements on a consolidated Global Single Instance under peak workload conditions.

Track and report cpu utilization and memory during test execution, including run queues, paging

Track and report I/O service times, wait times

Track and report transaction performance as measured by Oracle users

Track and report SGA performance (waits, enqueues, latches, etc.) io performance, sql statement resource usage

Track and report cpu utilization and memory for forms server processes during test execution

Track and report cpu utilization and memory for web server processes during test execution

Develop baseline performance metrics that can be used to tune the production system.

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Identify specific performance metrics and the methods to monitor, collect and report them. Establish specific quality controls relating to performance. Establish acceptance criteria and change management related to the performance test Establish processes and procedures to identify, track and resolve performance problems. Increase user satisfaction and system acceptance by minimizing performance related issues. Reduce effort required for reactive performance remediation. Define a method to evaluate the performance impact of a change to software or hardware. Validating that the workload being tested accurately reflects the work to be executed against the production

system Ensuring that a test environment exists which is similar in architecture as well as data volume and contents to the

production system Creating a performance test team which has functional and business process expertise on it as well as technical

expertise Access to performance testing expertise and tools

Process:

The performance testing subproject is aligned with OUM our implementation methodology into five phases as given below:

Inception Elaboration Construction Transition Production

Each of these phases has well defined tasks that need to be accomplished using our templates to make sure nothing is missed. The tasks closely interact within each phase and their output is fed to other phases. Following tasks are completed during five phases of the project for a successful performance testing:

Phase Task

Inception Conduct Performance Management Workshop Elaboration Define Performance Management Requirement and Strategy

Define Performance Testing Strategy

Identify Performance testing Models and Scenarios

Design Performance Test Scripts and Programs

Design Performance Test Data and Load Programs Construction

Build Performance Test Scripts and Programs

Construct Performance Test Environment and Database

Conduct Performance Test Dry runs Transition Execute Performance Test

Create Performance Test Report Production Conduct Production Performance Management

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A flow diagram depicting the interaction during different phases of performance testing is given below:

Performance team leader is responsible for leading the Performance Management process and reviewing the workproducts. The team leader plans, directs, and monitors the day-to-day work of the team. The team leader assigns work packages to the team members and makes sure they understand the requirements. The team leader is responsible for building team cohesion, motivating the teams, and providing assistance and encouragement to the team members.Each team leader performs the final quality control and quality assurance for the team by reviewing all work products. The team leader also signs off on team work completion and quality. Work that is not up to quality standards isreturned. Team leaders review work products from other teams when these work products may impact aspects of thesystem. The team leader reports the team's progress to the project manager.

Conducting Performance Management Workshop task is the first step in the Performance Management process. The Performance Management Workshop familiarizes the client with the concepts of proactive Performance Management, the need to define performance requirements for business critical transactions, establishment of metrics and

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monitoring related to performance management, Service-Level Agreements (SLA) and the appropriate use ofPerformance Testing. The workshop also provides a mechanism to gather information on performance needs andexpectations that should be used to develop the Performance Management Requirements and Strategy.

After the Performance Management Workshop, the Performance Management process continues with the definition ofthe Performance Management Requirements and Strategy. The performance management requirements and strategy documents the business critical transactions and their performance requirements, what metrics will beestablished and reported, what monitoring or instrumentation will be implemented and what control processes will beput in place. A performance testing strategy document is created which defines the scope and objectives ofperformance testing for the project and outlines the strategy that will be used to execute the performance test. The specific transaction scenarios and models are defined in the performance test transaction models and scenarios,design of test scripts and programs is documented in the performance test scripts and programs design, and any test data or load programs required are documented in the performance test data and load programs design document.

The Performance Management team defines the scope of testing and relates it to point-in-time snapshots of the transactions expected in the real production system. Technical analysts create or set up transaction programs tosimulate system processing within the scope of the test and populate a volume test database against which to executethe transactions. Once the system and database administrators have created the test environment, the project teamexecutes the test and the final results are documented.

Critical success factors:

• A limited and well defined test scope • Clearly defined success criteria for the test • Validating that the workload being tested accurately reflects the work to be executed against the production system • Ensuring that a test environment exists which is similar in architecture as well as data volume and contents to the

production system • Creating a performance test team which has functional and business process expertise on it as well as technical expertise • Access to performance testing expertise and tools

Summary A well planned performance and load test helps enterprises reduce performance risk, establishes performance viability of a specificarchitecture, and offers details on additional system capacity for future work load.

R12 Oracle E-Business Tax – New Features

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