Implementing a Major Re-Organization

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Implementing a Major Re-Organization

• Camp Dresser McKee
• Kiran Mundy

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Agenda

• Background
• The New Organization
• IS Tasks
• Create the new structure.
• Migrate Employees.
• Migrate Projects.
• Test and fix custom programs.
• Enable Matrix PL Reporting.
• Handle Adjustments.
• Schedule
• Cutover
• Problems
• Lessons learned

3
Background

• CDM is a global, full-service consulting,
  engineering, construction, and operations firm
  operating since 1947.
• Our specializations include waste water, solid
  and hazardous waste, geotechnical, drinking
  water, aviation and transportation services.
• Until 2003, the Company was organized in a
  hierarchical geographic structure.

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Applications

• We have used Oracle Financials since 1993.
• In 2003 we brought our Construction subsidiary
  from a legacy system into Oracle, as a new
  operating unit with its own company segment.
• We currently use Purchasing, Payables, Ledger,
  Projects, Receivables, Self Service HR, Training
  Administration, Advanced Benefits iTime.
• Revenue is done in a custom system and interfaced
  directly into GL.
• Until 2003, we had a 3 segment chart of accounts,
  Company-Workgroup-Account.

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ReOrg Business Objectives

• Align ourselves closely with the clients we
  serve.
• Move to more of a global focus on projects,
  applying strengths to our most strategic markets.
• Pool our resources by practice area to foster
  development and assure a succession of technical
  leadership.

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New Organization Structure
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Matrix Structure
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Key Features

• Create four client-focused business units -
  Services, Industrial Services, Federal Services,
  and International Servicesaligned with major
  client sectors, to lead marketing, sales, and
  project execution across the firm.
• Create two service delivery divisions organized
  by major areas of practice. The Consulting
  Engineering Divisions and the Construction
  Division provide the expertise and talent to
  deliver projects firmwide.
• The new structure functions as a matrix
  organization that leverages the full strength of
  our client relationships and our technical
  excellence.

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IS Directives

• Go Live must coincide with the beginning of the
  Fiscal year week of Jan 4th (In 2.5 Months!!!)
• Detailed PL reporting from the GL must be
  available for each Practice Area as well as for
  each Business Unit.

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IS Major Tasks

• Create the new organizational structure.
• Migrate employees to their new practice areas.
• Migrate Projects to their new Client Groups while
  managing Receivables.
• Test and fix custom programs and reports.
• Enable the creation of full PLs in Ledger by
  Business Unit as well Practice Area.
• Define a strategy to handle prior year
  adjustments.

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New Structure

• New Version vs Update Existing
• New version could be done ahead of time with
  effectivities.
• Prior re-orgs we had updated existing version.
• While testing the new version alternative a bunch
  of custom reports broke.
• Finally decided to go with the tried approach of
  updating existing version.

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New Structure..contd

• New Orgs vs re-using some existing.
• We had to retain acronyms that people were used
  to.
• Suffixed old orgs with _OLD
• Custom feeder systems (Revenue) had to have these
  same updates applied.

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Migrate employees

• Drove business to finalize where employees were
  going.
• Tested using dataloader to load new workgroups,
  but leave them out of the hierarchy.
• Tested using dataloader to load employee
  assignments with future effectivities.
• Could be done in advance of cut-over because of
  effectivities.

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Migrate Projects

• No effectivity on Project Owning Organization,
  had to be done on cut-over weekend.
• Receivables accounts for open receivables had to
  be updated within Projects AR.
• Receivables was coded to go to Company Code A/R
  Account Lead Workgroup - 0000
• When the payment came in, A/R credits would
  normally go to the Old Lead Workgroups.
• By updating the A/R accounts we would not have to
  re-classify in GL when the payment came in.

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PL Reporting

• With existing 3 segments, this would have
  involved writing a bunch of custom scripts out of
  PA to enable Finance to manually generate the
  PLs.
• We decided instead to add a 4th segment to our
  Chart of Accounts.
• All costs revenues would first go the to
  Practice Areas.
• The 4th segment would store which Business Unit
  direct costs revenues should be re-allocated
  to.
• Indirect Costs would then be re-allocated on the
  basis of direct costs (same ratio).

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PL Reporting.. contd

• The contra side of the re-allocation would go to
  special workgroup defined for each practice area.
• Practice Area PLs could be generated by
  excluding all amounts in this workgroup.
• When including these workgroups, practice areas
  would zero out.
• The reallocation would go to the Business Unit on
  the 4th segment.
• OH Costs (with default 4th segments) would
  allocate out in the same ratio as direct costs.

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Re-Allocation
Total 1.5m
Practice Areas
Business Units
North East Region
North Central Region
Environmental Planning
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Re-Allocation
Total 1.5m
Direct Costs 1m
Practice Areas
Business Units
OH Costs 500K
North East Region
North Central Region
Environmental Planning
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Re-Allocation
Total 1.5m
Direct Costs 1m
Practice Areas
Business Units
OH Costs 500K
600K Segment4 NER (60)
North East Region
400K Segment4 NCR (40)
North Central Region
Environmental Planning
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Re-Allocation
Total 1.5m
Direct Costs 1m
Practice Areas
Business Units
OH Costs 500K
600K Segment4 NER (60)
North East Region
400K Segment4 NCR (40)
North Central Region
Environmental Planning
300K (NER) 60 of OH Costs
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Re-Allocation
Total 1.5m
Direct Costs 1m
Practice Areas
Business Units
OH Costs 500K
600K Segment4 NER (60)
North East Region
400K Segment4 NCR (40)
North Central Region
Environmental Planning
300K (NER) 60 of OH Costs
200K (NCR) 40 of OH Costs
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Re-Allocation
Total 1.5m
Direct Costs 1m
Practice Areas
Business Units
OH Costs 500K
Total 1m
600K Segment4 NER (60)
North East Region
600
400K Segment4 NCR (40)
North Central Region
400
Environmental Planning
300K (NER) 60 of OH Costs
200K (NCR) 40 of OH Costs
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Re-Allocation
Total 1.5m
Direct Costs 1m
Practice Areas
Business Units
OH Costs 500K
Total 1m
600K Segment4 NER (60)
Contra (1m)
North East Region
600
400K Segment4 NCR (40)
North Central Region
400
Environmental Planning
300K (NER) 60 of OH Costs
200K (NCR) 40 of OH Costs
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Re-Allocation
Total 1.5m
Direct Costs 1m
Practice Areas
Business Units
OH Costs 500K
Total 1.5m
600K Segment4 NER (60)
Contra (1m)
North East Region
900
400K Segment4 NCR (40)
North Central Region
600
Environmental Planning
300K (NER) 60 of OH Costs
200K (NCR) 40 of OH Costs
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Re-Allocation
Total 1.5m
Direct Costs 1m
Practice Areas
Business Units
OH Costs 500K
Total 1.5m
600K Segment4 NER (60)
Contra (1m)
North East Region
900
400K Segment4 NCR (40)
North Central Region
600
Environmental Planning
300K (NER) 60 of OH Costs
Contra (500K)
200K (NCR) 40 of OH Costs
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Activating 4th segment

• Unfreeze key flex, activate segment4, refreeze.
• Populate all segment4 values in
  gl_code_combinations with default value.
• Review existing GL Allocations and Templates and
  add 4th segment where needed.
• Change Autoaccounting/Account Generator to
  populate 4th segment.

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Strategy for Adjustments

• Prior year adjustment problem.
• Problem 1 The reversing distribution copies its
  segments from the original item. At month end GL
  will end up with negative balances in the old
  workgroups.
• Solution In GL hierarchies move all old
  workgroups under the service delivery divisions,
  so these negative balances will, at least, be in
  the correct division.
• Problem 2 4th segment is not populated on these
  adjustments (which are direct costs), allocations
  are done based on the 4th segment, so the direct
  costs in the practice areas will not zero out.

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Adjustment Strategy contd.

• Solution To get a 4th segment populated, run a
  script after transaction entry has been shut off.
• Script pulls (for the month), the following
  columns where where 4th segment ! what
  Autoaccounting figures it should be.
• GL Date
• 4 segments in the system.
• Correct 4th segment
• Amount
• Upload the excel result into GL as spreadsheet
  journal entry.

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Adjustments - example

• Dec 2003 transaction
• DR 100.601011.1219.0000 100

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Adjustments - example

• Dec 2003 transaction
• DR 100.601011.1219.0000 100
• Transferred in Feb 2004. Feb GL gets
• DR 100.601011.1219.0000 -100
• DR 100.601011.2044.NER 100

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Adjustments - example

• Dec 2003 transaction
• DR 100.601011.1219.0000 100
• Transferred in Feb 2004. Feb GL gets
• DR 100.601011.1219.0000 -100 ? Problem
• DR 100.601011.2044.NER 100

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Adjustments - example

• Dec 2003 transaction
• DR 100.601011.1219.0000 100
• Transferred in Feb 2004. Feb GL gets
• DR 100.601011.1219.0000 -100 ? Problem
• DR 100.601011.2044.NER 100
• Upload script creates
• CR 100.601011.1219.0000 -100
• DR 100.601011.1219.NER -100

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Adjustments - example

• Dec 2003 transaction
• DR 100.601011.1219.0000 100
• Transferred in Feb 2004. Feb GL gets
• DR 100.601011.1219.0000 -100
• DR 100.601011.2044.NER 100
• Upload script creates
• CR 100.601011.1219.0000 -100
• DR 100.601011.1219.NER -100

Net Out
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Adjustments - example

• Dec 2003 transaction
• DR 100.601011.1219.0000 100
• Transferred in Feb 2004. Feb GL gets
• DR 100.601011.2044.NER 100
• Upload script creates
• DR 100.601011.1219.NER -100

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Adjustments - example

• Dec 2003 transaction
• DR 100.601011.1219.0000 100
• Final Result in GL
• DR 100.601011.1219.NER -100
• DR 100.601011.2044.NER 100

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Schedule

• Design Reviews with Finance all through October.
• Initial prototype configuration and testing in
  early/mid Nov.
• Final configuration and testing in early/mid Dec.
• FY 04 starts Jan 4th, 2004.
• Cutover scheduled for 1st fiscal week in 2004,
  after closing 2003.

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Cutover ..contd

• Friday
• Update GL Load workgroups update hierarchies
• Execute Project move program validate.
• Recompile Burden Schedules
• Backup database and Re-Open to all users.

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Cutover

• Wednesday
• Revenue completes, backup Production.
• Thursday
• Enable 4th segment in GL.
• Update autoaccounting flexbuilder.
• Load new hierarchy and new OH Projects.
• Move employees, validate send emails to
  impacted employees.

• First fiscal week of 2004.
• Monday
• Run last A/R schedule for year.
• Load new workgroups into Production.
• Tuesday
• Complete Payroll.
• Close Contract Admin access to Oracle.
• Open Jan04.

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Problems

• Correct accounting was dependent on all setups
  being correct.
• Autoaccounting was wrongly designed to default to
  zeros when it encountered a missing setup,
  instead of erroring.
• Few obscure AA logic bugs which were not caught
  during testing lead to a default 4th segment in
  the Direct Accounts (which should always have the
  4th segment populated with a Region).
• Allocations had not been tested well enough.

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Lessons Learned

• Finance Month End processing and allocations
  should have been tested more realistically.
• Adjustment strategy should have been more clearly
  discussed with Finance. ITS planned to treat
  adjustments as Overhead and allocate them.
  Finance disagreed, so upload scripts had to be
  written at the last minute.
• Always create detailed cross-verification scripts
  for all setup changes (done manually or
  programmatically).
• Let Autoaccounting error, rather than defaulting
  to a default account.

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Current Contact Info Kiran.Mundy_at_oracle.com Kiran
.Mundy_at_gmail.com