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Established in 1980, Lanka ORIX Leasing Company PLC (LOLC) is a highly diversified Sri Lankan conglomerate with a key focus on financial services, specializing in savings, fixed deposits, Islamic finance, pawnbroking, leasing, hire purchase, loans, factoring, securities, insurance, and microfinance services.
LOLC’s financial services arm is made up of five large companies: Lanka ORIX Leasing Company PLC, Lanka ORIX Finance Company Limited, Lanka ORIX Micro Credit Limited, Commercial Leasing Company Limited, and LOLC Factors Limited. The holding company LOLC also has interests in the hospitality, plantations and agriculture, power and renewable energy, automobile services, and the construction industry.
For the past four years, LOLC has used a shared services model, where all common services, including sales, IT, human resources, financial management, and other support functions are centralized and shared among the financial services companies.
“The goal of shared services for our finance team was to replace a decentralized model, where each company was using standalone financial management systems that had been developed in-house,” said Sunjeevani Kotakadeniya, group chief financial officer, Lanka ORIX Leasing Company PLC.
“We needed to deploy a standard, integrated enterprise resource planning (ERP) system that was more cost-effective and would grow with the organization.”
In 2008, LOLC engaged its IT services arm Lanka ORIX Information Technology Services Ltd., (LOITS) and Oracle Partner Satyam Computer Services Ltd India to implement Oracle E-Business Suite Release 12.0.6 Oracle Financials, Oracle Assets, Oracle Cash Management, Oracle Inventory Management, and Oracle Purchasing. These modules were deployed by the group’s centralized finance division at its corporate office in Colombo, Sri Lanka.
“Our biggest companies in the financial services sector process about 2,000 to 3,000 transactions per day,” said Kotakadeniya. “Oracle E-Business Suite streamlines the processing of those transactions, ensuring that our financial reports are timely and accurate. This enables us to make more informed business decisions.”
Colombo-based finance teams from LOLC’s corporate office use Oracle Financials to process monthly financial reports. Financial data generated from the many leasing, loans, deposit, treasury, and other systems are fed into the general ledger through an interface developed for each system.
Each company can generate its monthly financials faster by using an integrated system and a single, standard chart of accounts across all companies.
“Previously, each company would take between 12 and 20 days to generate their monthly financial reports,” said Kotakadeniya. “It would then take a further 20 to 30 days to consolidate financial information for the whole group. Now, each company can generate monthly financial reports within 7 days.”
According to Kotakadeniya, Oracle Financials provides LOLC’s accounting staff with access to structured financial data, which improves the credibility of accounting information across the organization. It also improves the productivity of the finance team by enabling them to extract data for basic queries and analysis without assistance from IT staff.
“The system also provides flexible reporting capabilities that enable us to determine how the organization is performing by business unit, product, geographic area, and distribution channel against existing financial targets and previous performance,” said Kotakadeniya. "This information helps us make more informed decisions about our revenue mix and geographical presence.”
Oracle Cash Management has automated the reconciliation process by matching bank statements with cash book transactions. The system has introduced a more streamlined approach, which makes it easier to track these transactions with the corresponding bank entry, rather than search through many spreadsheets to find the information.
“Oracle Cash Management ensures that the thousands of transactions generated every day are matched with our books and reconciled,” said Kotakadeniya. “This is a more structured approach, which saves time and enables our accounts staff to focus on other activities that add value to the organization.”
LOLC used Oracle Assets to create an automated assets register that enables the group to track the lifecycle and depreciation of around 80,000 assets at about 60 locations. These assets include buildings and land, office furniture, computer equipment, and about 2,000 company fleet vehicles, with some asset classes carrying complex depreciation methodologies.
The organization can now track each asset from the date of purchase, and automatically calculate its depreciation over time, rather than trawl through spreadsheets to find items and manually assess the drop in value.
“We have around US$20 million worth of assets across the organization, and each item must be easily tracked and depreciated each year,” said Kotakadeniya.
“Oracle Assets enables us to quickly and easily determine exactly when office items need to be replaced or when vehicles need to be serviced.”
Oracle Purchasing provides LOLC with a centralized system for its companies to procure office supplies, such as stationery, and computer accessories and consumables. Purchasing staff use the system to order these items, which are distributed to staff across its many locations.Oracle Inventory Management is also used to centrally manage levels of office supplies across each location and identify consumption costs.
“These applications have streamlined our purchasing and stock management procedures, which has enabled us to keep an eye on spending, track items that are not moving, and identify items that need to be written off,” said Kotakadeniya.
The system also allows automated expense allocation in a shared services environment. Manually calculating expenses, such as electricity and water for each company in the group is time consuming.
“Expenses can now be allocated easily to each subsidiary, which helps identify costs to relevant business units,” said Kotakadeniya.
LOLC reviewed several ERP solutions before the company’s users decided that Oracle E-Business Suite would best suit its needs.
“LOLC is a large, highly diversified conglomerate that has expanded into many new areas over the last couple of years,” said Kotakadeniya. “We felt that Oracle E-Business Suite provided the flexibility we needed to handle this dynamism and growth.”
Some of LOLC’s IT staff had prior experience using Oracle Database and Oracle Application Server to develop several front-end applications.
“Our IT services arm, Lanka ORIX Information Technology Services Ltd., also decided to become an Oracle Partner, so it made sense for us to continue using Oracle solutions,” said Kotakadeniya.
LOLC’s Group Finance Team worked with LOITS and Satyam’s technical specialists to implement Oracle E-Business Suite. During the implementation, these specialists created a single, standard chart of accounts for the entire organization, designed new accounting processes, and transferred existing balances to Oracle E-Business Suite.
The specialists then designed an interface for front-end applications that were integrated with the general ledger, designed the purchasing and inventory system, and created a comprehensive fixed assets register and key reports. Oracle E-Business Suite was implemented in six months.
Satyam’s technical experts also provided initial training to 68 users over six weeks to ensure they were comfortable using the Oracle system.