Organization Modeling made easy in Microsoft Dynamics AX 2012

Hi Friends,

By this time most of us must be already aware of Organization modeling in Dynamics AX 2012. I just wanted to bring in perception of this functionality.

Microsoft Dynamics AX 2012 brings in another exciting capability which now makes it possible for organizations to manage their organizational structure in more efficient, easy and accurate manner. In AX 2009, it was not possible to define a structure of organizations, as it was possible only to define different company accounts which were pretty much separated from each other.

In reality, different parts of an organization such as legal entities, departments, business units, cost centers, teams etc. work together and are always dependent on each other in some way. Microsoft Dynamics AX 2012 makes it all possible by introducing a very flexible Organization Model functionality.

In today’s post we will take a look at the important aspects of this organization modeling and try to understand how this can help organizations in real-time. To begin with, let us first discuss about the different types of organizations which we can create in AX 2012.

Organizations:

An organization basically signifies a group of people and resources who work together to carry out a defined business process with a mission. We can create two types of organizations in AX 2012.

• Legal entities : This is an organization which has a registration with a legal authority and can enter into contracts with customers and are required to produce statements that reports their performance. This is similar to a company account which we used in AX 2009.
• Operating units: An operating unit is a type of organization that is used to distribute economic resources and business processes of the organization. We can create the following types of operating units in AX 2012 out of box.

1. Business unit
2. Cost center
3. Department
4. Value stream

Along with these 4 types of operating units, organizations can also create Teams and make it a part of the Organization structure. A team could be referred to group of people who share common responsibilities such as Collections team, AR team, AR team etc..

Organizational Hierarchies:

In AX 2012, we can set up a hierarchy of all the organization types. For example we can create a hierarchy of legal entities for tax and statutory reporting.

We can also create a hierarchy of operating units to report financial information which are required internally within the organization. For example we can create organization purchases to control purchasing policies, budgets and business processes.

An important point to note here is, all the organizations in a hierarchy can share parameters, policies and transactions. The child organizations can inherit and override the parameters of its parent. Also note that, in AX 2012, the globally master data such as address books, currencies etc. cannot be overridden for individual organizations.

To be able to create a hierarchy of organizations in AX 2012, we must first define a purpose of this hierarchy. This purpose would define which types of organizations can be included in the hierarchy. There are various hierarchy purposes available out of box in AX 2012 few of which are procurement control, expenditure control, audit internal control etc. You can find more information when you get hands dirty in the system. I would demonstrate a hierarchy by taking the expenditure control purpose into account.

To create a new organization hierarchy, navigate to Organization administration >  Common > Organizations > Organization Hierarchies.

Configure the organization structure with easy steps by selecting organizations and doing drag and drop.

Please take a look at the screenshot below which shows a sample organization that I have configured.

Publish the organizational structure changes with tracking dates and complete audit histories. You can also publish the hierarchy for a future date.

Now that the organization hierarchy has been published and in effect, you can use it for

• Defining expense, audit and procurement policies using this hierarchy. This will cause the policy to be effective across this hierarchy.

• Configure accounting structures and specify organization hierarchy relationships. This will cause to have more control in transaction entry where system will have automatic validations in place for selection of financial dimensions in the transaction line.

• Helps in organizational data security by configuring legal entities for user rules.

The new organization model functionality of AX 2012 allows configuring complex organization models without writing additional code and also allows users to easily restructure, as organizational structure needs changes. Microsoft Dynamics AX 2012 grows as your business grow and needs complex organizational structuring for better and tight financial controlling. This makes AX 2012 simply more powerful.

Let me know if you have any questions regarding the organization modeling in AX 2012. Till next time !!

Sandeep