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KBACE Acquisitions & Divestitures

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  • 1. Acquisitions & Divestitures: In the E-Business Suite Environment Jeff Johnson – Senior Vice President, KBACE February 24th, 2009 1 © 2009 KBACE Technologies, Inc.
  • 2. Webinar Logistics • Hide (and unhide) the Webinar control panel by clicking on the arrow icon on the top right of your screen • The small window icon toggles between a resizable window and full screen mode • Ask questions throughout the presentation using the chat dialog • Questions will be reviewed at the end of the presentation • A copy of this presentation will be made available at: http://kbace.com/Services/Webinars.aspx 2 © 2009 KBACE Technologies, Inc.
  • 3. Presenter • Jeff Johnson, Senior Vice President: Mr. Johnson has over 20 years of expertise in architecting and implementing technology based solutions for complex business problems. Mr. Johnson has a strong financial management background, and system design and implementation experience with a number of software applications. Possessing a broad understanding of Oracle’s technologies and business applications, he uses this knowledge to help his clients solve business challenges. 3 © 2009 KBACE Technologies, Inc.
  • 4. Planning Critical Business Changes Under Tight Timelines The process of integrating a new acquisition into, or divesting a subsidiary or division out of your E-Business Suite environment is no small task. In fact, this effort is often underestimated resulting in additional costs beyond what was expected with the initial financial transaction. There are a myriad of activities required to complete your acquisition or divestiture, many of which require the participation of common resources, all while you still perform daily business functions. Many times, the acquiring company does not realize the entire value of absorbing an organization running the Oracle E-Business Suite. The acquired platform can enhance existing business processes including consolidations, reporting, and demand planning. KBACE has assisted more than ten E-Business Suite (EBS) customers in the last three years with integrating their acquisitions into, or splitting their divestitures out of their EBS platform. 4 © 2009 KBACE Technologies, Inc.
  • 5. Agenda • The Business Challenge • Two Case Studies • Lessons Learned • Top Critical Things to Plan For 5 © 2009 KBACE Technologies, Inc.
  • 6. The Business Challenge #1 • You’ve acquired a new company and have 4 months to fully integrate them into your E-Business Suite environment. Integration includes business process adoption as well as the technical aspects of preparing your existing environment for more data, users, transactions, reports, and quite possibly EBS modules. You have more questions than answers: • What system(s) are they using today? • Will your environment accommodate all of their business needs? • Can your existing hardware and network handle the larger volume? • Who needs to be on the integration team? • Who will train the new users on your procedures, or you on theirs? • Where will historical data go? How? 6 © 2009 KBACE Technologies, Inc.
  • 7. The Business Challenge #2 • You’ve sold a division of your company and have 4 months to implement a stand-alone E-Business Suite instance for them to continue operate on. You know they need hardware and software. But exactly how will you carve them out of your business when: • Their data is co-mingled with yours and processed in your shared service center. • You need to provide them with 5 years of history for all applications. • They don’t have people in every functional or technical role required to manage the business or system, or test the new EBS instance. • You don’t have documentation of your customizations or reports and don’t know what needs to be provided or changed. 7 © 2009 KBACE Technologies, Inc.
  • 8. The Business Challenge #3 • You’ve sold a subsidiary of your company and “just” need to support them for 4 months until the acquiring company integrates them into their ERP system. What does “just support” mean? Practically speaking, how is support performed and by whom? • Do they continue to use your production EBS environment or can/must you separate them now? • Can you isolate their data and transactions and tighten security to prevent them from seeing or interacting with yours? • Do they need their own set of reports or interfaces? • How do you separate bank accounts, and payroll processing on Day 1 of the divestiture? • Do any of your staff need training or knowledge transfer on functions that their staff performed for both of you? (or vice versa) How much effort will be required to support their data conversion needs? • Who must design and build extract programs to provide data? • How much testing support will be required? • How will you provide them with x years of history for all applications? What do you do with all the in-process transactions upon cut-over? 8 © 2009 KBACE Technologies, Inc.
  • 9. Business Challenge #4 The clock is already ticking… 9 © 2009 KBACE Technologies, Inc.
  • 10. Case Study 1: Acquisition • A North American company running EBS 11.5.10.1 acquired a division of another company running EBS 11.5.10.2. • The “seller” is required to provide the “buyer” with 4 months of EBS support for the sold division, while the buyer integrates them into their applications environment. • Business requirements: The buyer runs 11 EBS modules while the acquired business runs 24 The buyer’s EBS must be upgraded to 11.5.10.2 The current hardware cannot accommodate the combined business Data conversion includes 26 subjects; master data must be merged Data history must be available but cannot be practically converted The acquired division includes no Super-users with adequate knowledge to support themselves or fully understand the integration across all 24 EBS modules. The buyer does not possess this knowledge either. 10 © 2009 KBACE Technologies, Inc.
  • 11. Solution highlights • Technical Architecture planning Evaluated buyer’s existing hardware platform, estimated user, transaction, & data volumes for combined company and designed new platform to accommodate it. • Business Architecture planning Conducted workshops to identify how the 11 common EBS applications were used & configured and determined what would need to be altered for the new division to ‘fit’ into the buyer’s EBS environment. Defined data conversion needs and application extension migration approach • Upgrade to 11.5.10.2 Installed new EBS modules, family packs, and patches into the buyer’s environment to bring them up to the level the new division was running. Tested and migrated upgraded platform to new hardware. • Conference Room Pilot 2 (CRP2) Configured upgraded environment for new modules and customizations, tested functionality and data conversions. 11 © 2009 KBACE Technologies, Inc.
  • 12. Solution highlights • Data conversion Master data & in-process transactions only History in a separate data store • Conference Room Pilot 3 (CRP3) & User Acceptance Testing (UAT) Upgraded production environment configured for new modules. Full data conversion & extension testing Application testing – 80/20 rule • Scope Control Whatever can wait until post cutover is put on “Day 2” list No enhancements. NO ENHANCEMENTS ! • Robust cutover plan 400+ line project plan No time to test the cutover; No detail too small to be planned & tracked Master data converted before cutover weekend 88 hour cutover executed around the clock 12 © 2009 KBACE Technologies, Inc.
  • 13. Critical Success Factors • Teamwork • Scope Management • No Roadblocks • Fast Decisions • 24 x 7 progress • Good DBA’s 13 © 2009 KBACE Technologies, Inc.
  • 14. Case Study 2: Divestiture • A global company running 15 EBS modules spun off a division as an independent company. The “seller” had to establish an entire information systems infrastructure for the division within 6 months. • Accounting and IT functions were provided through shared service centers: customers, suppliers, employees, transactions/data were co-mingled and shared. • The divested company did not have staff with strong knowledge of how the EBS worked – no superusers or systems analysts to manage the applications. • Business requirements: Establish mirror image of EBS applications required by the division – 15 modules – including all custom interfaces, extensions, and reports on “Day 1” Determine who’s data belonged to whom and provide the in-process transactions on “Day 1” Provide 5 years of data history in electronic format 14 © 2009 KBACE Technologies, Inc.
  • 15. Solution highlights • Technical Architecture Seller purchased new hardware and the new company (Newco) retained the existing hardware that the EBS was running on. • Business Architecture All business processes remained exactly the same for the cutover. No changes to chart of accounts, transaction types, auto accounting rules, workflow rules, etc. • EBS Application Platform Existing, shared, EBS environment was cloned for the Seller and the Newco retained the existing environment on the existing hardware. 15 © 2009 KBACE Technologies, Inc.
  • 16. Solution highlights • Data Conversion No data conversion was required since the EBS environment was retained Program scripts were created to “mask” or scramble the Seller’s data in the EBS instance • The scripts changed names, addresses, descriptions to generic labels: o Customer KBACE Technologies became “Customer123456” o Employee Jeff Johnson became “Employee123456” • Over 50 data elements were masked in this manner • Co-mingled transactional data was often segregated by GL distribution lines – the only way to determine whose invoices were whose 16 © 2009 KBACE Technologies, Inc.
  • 17. Solution highlights • Data cleanup In-process transactions for the Seller, in the Newco instance, were processed through to completion • AP invoices “paid” with “dummy” bank • AR invoice balances adjusted to zero • Fixed assets disposed • Employees terminated • FND Users disabled • GL balances closed • Accounts, Customers, Suppliers inactivated, etc. The end result to the Newco was an EBS instance with only their active data: • No possible way to accidentally process Seller transactions • No feasible manner to recreate confidential information such as social security numbers, customer identity or activity, etc. • Historical transactions intact; full access to history 17 © 2009 KBACE Technologies, Inc.
  • 18. Solution highlights • 3 Rounds of Testing Each round progressively improved accuracy of data masking scripts as well as detailed cutover plan 90 step cutover plan included all activities for 48 hours before cutover started through final reconciliations and release of system to users • Production cutover Executed in 96 hours around the clock over Thanksgiving weekend Zero downtime for both companies • Production Support KBACE performed Superuser & Systems Analyst functions to Newco until they hired permanent staff for these roles 18 © 2009 KBACE Technologies, Inc.
  • 19. Critical Success Factors • Creative “reverse” approach Eliminated need for data conversion & data warehouse for historical data Masking scripts eliminated risk of purging/deleting database records • Teamwork • Senior management readily available to make or approve difficult decisions • 24 x 7 progress • Dedicated, Excellent DBA team • Personal sacrifice during cutover weekend 19 © 2009 KBACE Technologies, Inc.
  • 20. Lessons Learned • The team must have a single focus on getting the job done • Forced deadlines enable fast decisions and eliminate scope creep • Workflows get you every time during cutover • Look for embedded email addresses • The devil is in the details Every past “sin” will be exposed • There is more work than you can imagine, and you’ve got to do your ‘regular’ job too • You can’t test everything 100% before you cut over So your cutover plan must be in excruciating detail 20 © 2009 KBACE Technologies, Inc.
  • 21. Top Critical Things to Plan For • Platform Architecture • Business Process Architecture • Data Management • Cutover Planning & Execution • Post Production Support 21 © 2009 KBACE Technologies, Inc.
  • 22. Platform Architecture • Sizing your hardware needs is an art, not a science Do this early, make educated guesses, don’t chase precision Order new hardware early – approvals, negotiations, delivery and deployment take time and are critical path items • Avoid unnecessary changes Different operating systems, software versions, application release levels, family packs, etc. add unmanageable risks and cause delays Make changes after cutover, following best practices for testing and change management – when you have more time to do them properly 22 © 2009 KBACE Technologies, Inc.
  • 23. Business Process Architecture • This is not an IT project • Business process and people integration are part of the project • Many processes will change, for both parties There are no “best” practices; but there are “better” ones Only your best and brightest can bring them together; they must dedicate significant time to the project • Process changes affect everyone From data entry to generating the reports • You need a bona fide solution architect To quickly evaluate impact across modules To guide decisions and look out for gotcha’s 23 © 2009 KBACE Technologies, Inc.
  • 24. Data Management • Master data must be owned by named individuals All data conversions are dependent upon good master data Garbage in will haunt you forever All management reports will be impacted • History costs money Every company needs their history Data warehouses are expensive to build Data privacy is non-negotiable This is never budgeted by the deal makers 24 © 2009 KBACE Technologies, Inc.
  • 25. Cutover Planning & Execution • Murphy’s Law is real Don’t leave anything to chance Don’t leave room for human error Build an obnoxiously comprehensive cutover plan • You’ve got only one shot at cutting over on time • Don’t wait until the end - Cutover weekend is too short Start separating transaction processing immediately Migrate hardware in month 2 Convert master data weeks before cutover weekend Don’t wait for others to catch up – keep moving forward • There is no such thing as over-communicating Don’t assume everyone understands or will speak out • Round the clock execution is mandatory to avoid significant downtime 25 © 2009 KBACE Technologies, Inc.
  • 26. Post Production Support • The “Day 2” list will be long Plan on significant effort to address critical items in the 30-60 days after cutover • Most issues will arise in week 1 Orphaned workflows, broken hierarchies, data conversion gotcha’s • Many people will require training Knowledge transfer happens after cutover Superuser training happens after cutover Documentation of business processes happens after cutover • Staff up help-desk support Knowledgeable users who can solve problems quickly 26 © 2009 KBACE Technologies, Inc.
  • 27. Questions & Answers 27 © 2009 KBACE Technologies, Inc.
  • 28. For More Information http://kbace.com/Services/AcquisitionsDivestitures.aspx Jeff Johnson: jjohnson@kbace.com For the recording and PowerPoint presentation, please visit: http://kbace.com/Services/Webinars.aspx 28 © 2009 KBACE Technologies, Inc.