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

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 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.

9. IS Directives Go Live must coincide with the beginning of the Fiscal year – week of Jan 4 th (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&Ls 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&Ls. We decided instead to add a 4 th segment to our Chart of Accounts. All costs & revenues would first go the to Practice Areas. The 4 th 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&Ls 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 4 th segment. OH Costs (with default 4 th segments) would allocate out in the same ratio as direct costs.

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

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

19. Re-Allocation Practice Areas Business Units $600K Segment4 = NER (60%) $400K Segment4 = NCR (40%) OH Costs = $500K Direct Costs =$1m Environmental Planning North East Region North Central Region Total = $1.5m

20. Re-Allocation Practice Areas Business Units $600K Segment4 = NER (60%) $400K Segment4 = NCR (40%) OH Costs = $500K $300K (NER) 60% of OH Costs Direct Costs =$1m Environmental Planning North East Region North Central Region Total = $1.5m

21. Re-Allocation Practice Areas Business Units $600K Segment4 = NER (60%) $400K Segment4 = NCR (40%) OH Costs = $500K $300K (NER) 60% of OH Costs $200K (NCR) 40% of OH Costs Direct Costs =$1m Environmental Planning North East Region North Central Region Total = $1.5m

22. Re-Allocation Practice Areas Business Units $600K Segment4 = NER (60%) $400K Segment4 = NCR (40%) OH Costs = $500K $300K (NER) 60% of OH Costs $200K (NCR) 40% of OH Costs Direct Costs =$1m Environmental Planning North East Region North Central Region $600 $400 Total = $1m Total = $1.5m

23. Re-Allocation Practice Areas Business Units $600K Segment4 = NER (60%) $400K Segment4 = NCR (40%) OH Costs = $500K $300K (NER) 60% of OH Costs $200K (NCR) 40% of OH Costs Direct Costs =$1m Contra ($1m) Environmental Planning North East Region North Central Region $600 $400 Total = $1m Total = $1.5m

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

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

26. Activating 4 th 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 4 th segment where needed. Change Autoaccounting/Account Generator to populate 4 th segment.

27. 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: 4 th segment is not populated on these adjustments (which are direct costs), allocations are done based on the 4 th segment, so the direct costs in the practice areas will not zero out.

28. Adjustment Strategy – contd. Solution: To get a 4 th segment populated, run a script after transaction entry has been shut off. –Script pulls (for the month), the following columns where where 4 th segment != what Autoaccounting figures it should be. GL Date 4 segments in the system. Correct 4 th 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 4 th, 2004. Cutover scheduled for 1 st 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 Jan04. 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 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 4 th segment in the Direct Accounts (which should always have the 4 th 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