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Implementing a Major Re-Organization

Implementing a Major Re-Organization. Camp Dresser & McKee Kiran Mundy. Agenda. Background The New Organization IS Tasks Create the new structure. Migrate Employees. Migrate Projects. Test and fix custom programs. Enable Matrix P&L Reporting. Handle Adjustments. Schedule Cutover

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Implementing a Major Re-Organization

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  1. Implementing a Major Re-Organization Camp Dresser & McKee Kiran Mundy

  2. Agenda • Background • The New Organization • IS Tasks • Create the new structure. • Migrate Employees. • Migrate Projects. • Test and fix custom programs. • Enable Matrix P&L 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.

  4. 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 it’s 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.

  5. 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.

  6. New Organization Structure

  7. Matrix Structure

  8. Key Features • Create four client-focused business units - Services, Industrial Services, Federal Services, and International Services—aligned 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.

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

  10. 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 P&L’s in Ledger by Business Unit as well Practice Area. • Define a strategy to handle prior year adjustments.

  11. 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.

  12. 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.

  13. 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.

  14. …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.

  15. P&L 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 P&L’s. • 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).

  16. P&L Reporting.. contd • The contra side of the re-allocation would go to special workgroup defined for each practice area. • Practice Area P&L’s 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.

  17. Re-Allocation Total = $1.5m Practice Areas Business Units North East Region North Central Region Environmental Planning

  18. Re-Allocation Total = $1.5m Direct Costs =$1m Practice Areas Business Units OH Costs = $500K North East Region North Central Region Environmental Planning

  19. 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

  20. 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

  21. 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

  22. 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

  23. 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

  24. 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

  25. 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

  26. 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.

  27. Strategy for Adjustments Prior year adjustment problem. • Problem 1: The reversing distribution copies it’s 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.

  28. 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.

  29. Adjustments - example • Dec 2003 transaction DR 100.601011.1219.0000 $100

  30. 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

  31. 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

  32. 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

  33. 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

  34. 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

  35. 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

  36. 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.

  37. 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.

  38. Cutover • 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 Jan’04. • 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.

  39. Problems • Correct accounting was dependent on all setups being correct. • Autoaccounting was wrongly designed to default to zero’s 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.

  40. 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.

  41. Current Contact Info: Kiran.Mundy@oracle.com Kiran.Mundy@gmail.com

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