Managing Financial Consolidation in ECCS

2. 2

3. 3 Abstract Description: Discover how Allison Transmission is planning to implement the enterprise controlling-consolidation function in SAP ECCS for financial consolidation. This session covers the solution's functionality, including specific constraints and lessons learned in meeting the reporting requirements of a group that comprises multiple diverse operating entities from various global regions. Key Learning Points: * Facilitating an auditable business process * Uniform data collection and warehousing * Platform for efficient and accurate reporting

4. 4 About Allison Transmission The world leader in the design, manufacture and sales of commercial-duty automatic transmissions for on-highway trucks and buses, off-highway equipment and military vehicles. The company holds an 80% market share of all medium- and heavy-duty commercial fully automatic transmissions produced.

5. 5 About Allison Transmission Founded in 1915 by James Allison Headquartered in Indianapolis Five international regional offices: The Netherlands, Japan, China, Singapore, and Brazil. Presence in more than 80 countries, which includes over 1,500 distributors and dealers. Workforce of over 4,000 salaried and hourly employees. Owned by GM until August 2007 when sold to two private equity firms: Onex Corporation and Caryle Group

6. 6 About GyanSys Head-quartered in Indianapolis since 2001 Provides cost effective innovative solutions using Onshore, Offshore and Near-shore delivery models Specializes in FSCM, PLM, CRM, SCM, HCM, SRM and other business suites on BI & Portal Extensive experience Project Management, Change Management and Business Process Reengineering Ongoing Partnership with SAP on Product testing and Education

7. 7 Allison System Landscape Implemented FI (GL, AR, AP, SPL), CO (CCA, PCA, CO-PA, IO), PS, SD, MM, WM, PP in 2001 Upgraded to ECC 6.0 from 4.6C in Dec 07 Sandbox, Development, Quality & Production systems One FI company is live in SAP Currently implementing FI-AM, HCM, Unicode upgrade, Portal, BI and rolling out SAP to international affiliates

8. 8 Drivers for Implementation Divestiture Owned by GM and sold to Private Equity Groups in Aug�07 SAP implementation geared towards to support business requirements of a division of a company not as separate financial entity Consolidation was done at Corporate Level Current State Manual and Excel based solutions Time-consuming during multiple iterations Resource Risk Audit Risks Not Transparent

9. 9 Why Allison chose ECCS over Others BW was on 3.1 and the process of being upgraded Rapid/Quick implementation ECCS is stable and well understood Simpler business requirements and for Actual only Real-time update from FI/CO BI-BCS/OutlookSoft requires ECC integration besides additional licensing cost Hyperion requires interface and extra system resource requirements New tools will have ongoing support implication Lower Implementation cost since team size is small

10. 10 Project Scope Phase I Standalone ECCS Flexible File upload for all entities New Group COA Legal Consolidation Allows focus of attention on core consolidation functions first E.g. exchange rate translation, elimination, adjustment entries, validation rules etc. Phase II Real-time Update from FI Assigning new Group COA to Operational COA Requires �Trading Partner� in all inter-company postings Additional validations/substitutions rules

11. 11 Team Structure Full Time: 1 Financial Accountant 1 ECCS Functional Consultant Part-Time Business Process Owner IT Project Manager ABAP Resource

12. 12 Future State: Prepare Master Data Consolidation Groups Hierarchy Financial Items Hierarchy Additional Sub-Items (e.g. Functional Area) Additional Characteristics (e.g. Segment) Break-down Categories (e.g. Trading Partner)

13. 13 Future State: Collect (Data Monitor) Method of Update Flexible file upload (Phase I) Real-time update from FI (Phase II) Periodic Extract Roll-up through SPL Adjustment Entries Manual Automatic Re-class

14. 14 Future State: Collect (Data Monitor) Currency Translations Unique exchange rates for B/S (month-end) and IS (average) US FAS52 compliant (e.g. Equity at historical rate) Different than FI revaluation Same central exchange rate table in SAP (OB08) Finite control over each FS Item being translated Leverage Versions for different types of translations for other GAAP requirements

15. 15 Future State: Collect (Data Monitor) Retained Earnings Automatic calculation of current year retained earnings at every consolidation cycle Validation Data integrity checks TB (BS & IS) must be equal to zero Assets = Liabilities + Shareholder�s Equity Avoid errors in case of Flex-file upload Sense checks Any other business rules

16. 16 Future State: Consolidate (Consolidation Monitor) Inter-unit elimination Can be done for both BS (I/C AR and AP) and IS (I/C Revenue & COGS) Multiple Steps within each method Control Mechanism in case of differences Task can be performed multiple times in test mode Validation Similar checks in Group Currency

17. 17 Future State: Consolidate (Consolidation Monitor) Adjustment Similar entries in Group currency Consolidation of Investment (Out-of Scope) Required in case of Minority Interest calculation Overkill in case of 100% of ownership Time Consuming and Complex

18. 18 Future State: Analysis Database Listings report (CX34) is the most powerful report Standard delivered reports are not sufficient Developed a custom ALV report with comparative analysis BW standard delivered extractors are planned to be leveraged in the future

19. 19 Future State: Integration with other modules ECCS Consolidation Unit maps to FI Company not FI Company code FI Group COA maps to ECCS FS Items hierarchy Custom Characteristics can be derived automatically without any enhancements � e.g. Segment, Functional Area, Plant etc. Requires FI Trading partner as a basis for elimination (cross-company postings, inter-company Stock Transfer) Simultaneous postings in ECCS, FI and sub-ledger document and drill-down capability Method of entry can be changed from Flexible Upload to real-time update as Companies go-live in SAP

20. 20 Implementation Tips : Help file: http://help.sap.com/printdocu/core/Print46c/en/data/pdf/ECCS/ECCS.pdf Custom characteristics can not be transported. OSS Note: 402968 All master data are transportable Data can be deleted if required (CXDL) Test system only Upload file formats (Flexible !!!!) are easily configurable

21. 21 Benefits : Graphical with Status Icons Ability to upload multiple times Lock vs. Un-lock.. Restrict the users to specific entity Control environment Consistent manner Allows different methods for different entities R/3 and non-SAP company codes Data integrity and Accounting Sense Checks Identify differences between I/C account and specify on how to treat them (Alert and Control mechanism) Ability to check proper inter-company posting at the time of origination

22. 22 Key Learning: Define the internal business process first before system implementation Dedicated full-time business resource Manageable scope and team focus Implement in Phases (Walk before Run !!!!!)

23. 23 Speaker Contact Information Brenda Hagen Allison Transmission, Manager of Accounting E-mail: brenda.hagen@allisontransmission.com Raj Una GyanSys Inc., Senior Solution Architect E-mail: raj.una@gyansys.com Please visit GyanSys Booth 484 for more details

24. 24 Thank you for participating.