In this case study, we will review how a multi-billion dollar company regularly acquires companies and seamlessly integrates them into their existing ERP and BI systems and the processes that they support. We will focus on all phases of the acquisition from discovery through implementation and support and provide you helpful tips on how a smooth acquisition and integration process can save your headaches (and big bucks!)

1. Buying or Getting Bought?
A case study in merger and acquisition projects
John Hoebler, MorganFranklin
John.hoebler@morganfranklin.com
April 2011

2. Agenda
About MorganFranklin
Disparate Systems
• Disadvantages and Benefits of Consolidations
ERP Conversion—Case Study
• Strategy
• Plan
• Execution
Q&A

3. About MorganFranklin
MorganFranklin is a 300-person ―roll-up-your-sleeves‖ management consulting firm.

4. Our Technology Management Practice is Focused
We know what we do well, and we have partners that help extend our capabilities.
Our Extended Capabilities
Our Core
Leadership | Thought | Execution
Skills Products
• System Admins • SAP
• Infrastructure
1. HR/Financial Management • SharePoint
• DBAs 2. Enterprise Systems Management • Workday
• Developers • PeopleSoft • NetSuite
• Oracle EBS • JDE
3. Enterprise Information Management
• Hyperion
• Microsoft
• Cognos

5. Our Presence at Collaborate
5 Session Presentations
• Sunday - April 10th (11:15-12:15) – Room W202A
IT Projects Off the Rails – Causes and Fixes
• Monday - April 11th (3:45 – 4:45) – Room W202A
Buying or Getting Bought? A Case Study in M&A Projects
• Wednesday - April 13th (10:30 – 11:30) – Room 205C
We Trained You – Why Didn’t You Learn? A Case Study in Change Management
• Wednesday - April 13th (2:15 – 3:15 pm) – Room 204B
Multicurrency Capabilities in PeopleSoft - All You Wanted to Know
• Thursday - April 14th (9:45 – 10:45) – Room 204B
Allocations in PeopleSoft - All You Wanted to Know

6. Where We Are…
About MorganFranklin
Disparate Systems
• Disadvantages and Benefits of Consolidations
ERP Conversion—Case Study
• Strategy
• Plan
• Execution
Q&A

7. Two Disparate ERP Systems with Minimal
Integration

8. Disadvantages and Benefits of Consolidations
Disadvantages of Disparate Systems
• Costly to maintain multiple disparate and redundant systems
• Multiple standards
• Multiple versions of truth
• Disparate processes
• Consolidated reporting is difficult and time-consuming
Benefits of Consolidating Disparate Systems
• Reduction in IT expenditures by having to maintain fewer systems
• Less complex control environment due to simplified system interfaces
• Streamlined financial reporting and analysis

9. Where We Are…
About MorganFranklin
Disparate Systems
• Disadvantages and Benefits of Consolidations
ERP Conversion—Case Study
• Strategy
• Plan
• Execution
Q&A

10. Case Study: Client Profile
A large government technology contracting company was seeking to integrate
a recent business acquisition that was approximately 10% of its overall size
onto the corporate financial platform.

11. First - We needed a strategic vision . . . .

12. Why Projects Fail
Top 3 Reasons Projects
Fail2
1. Management Support
2. Sound Methodology
3. Leadership
1 – 2009 Standish Group CHAOS Survey
2 – Dr. Paul Dorsey’s paper “Top 10 Reasons Why Systems Projects Fail,” as published by Harvard University

13. Assessment Framework
Baseline requirements and architecture assessments provide basis for the recommendations.
• Use industry baseline requirements to assess acquiring organization’s existing capabilities.
• Compare acquiring organization’s existing and near-term capabilities of current ERP against its
out-of-box ERP capabilities.
• Compare both target architecture platforms against acquiring organization’s strategic objectives.
Score the alternatives based upon the ability to achieve those objectives.
• Provide recommendations on the financial management system strategy.

14. ERP1 Consolidation
Consolidating to ERP1 improves upon the current architecture but remains
heavily customized.

15. ERP1: Risks and Benefits
ERP1 provides less functionality, but also less risk and supports overall goals.
25 objectives were identified and scored on a three-point scale:
1. Minimal risk of achieving strategic objectives
2. Some risk of achieving strategic objectives
3. High risk of achieving strategic objectives
Risk Scores
Strategic Objectives
ERP2 ERP1
Ability to support revenue growth 3 2
Ability to support both public and commercial sectors 1 2
Ability to establish a scalable environment 3 2
Ability to change and adapt to new organizational structures 1 2
Ability to convert acquired businesses to the same platform quickly and effectively 1 2
Ability to easily integrate with third party systems 3 1
Ability to meet all government contracting and financial system requirements 1 2
Ability to train users easily 2 1
Ability to minimize impact on Finance Systems Users 3 1
Ability to capture and maintain operations information in an integrated and standardized reporting
2 3
platform (e.g., BI, Financials, and Operations reports)
Ability to standardize reporting and reduce the number of ad-hoc reports 2 3
Ability to minimize required IT skill sets for operations, maintenance, and support 3 2
Ability to minimize development costs/implementation timeline 3 2
Ability to maximize existing IT infrastructure 2 1
Total Risk Score
49 45
(including scores from the equivalent risks represented on the prior slide)

16. Functional Area Analysis
A weighted scoring framework was applied to each functional area based on priority and impact.

17. Recommendation
While the current ERP1 environment is complex with multiple instances, given the acquiring organization’s
investment in ERP1, customizations, and supporting third-party products, the acquired organization’s ERP
capabilities do not significantly outweigh the current ERP1 capabilities.

18. Next, we needed a plan . . .

19. Integration Approach: Framework
Multiple sources of information drive a complete strategy and potential alternatives.

20. Stakeholder Interviews
Resource Processes Legacy One-Off Data
System Systems Conversi
on
X, Y Contract Administration and Procurement – To Be Legacy   
X, Y General Ledger – To Be New   
X,Y PCB Lead – To Be New   
X, Y, Contracts, Billing and Project Controls – To Be New  
X, Y, Project Management – To Be Legacy  
X, Y, Project Management – To Be Legacy  
X, Y, Project Management - To Be Legacy  
X, Y, Project Controls – To Be Legacy  
X, Y, Project Controls – To Be Legacy  
X, Y, Project Controls – To Be New  
X, Y, Billing – To Be Legacy  
X, Y, IT – To Be New  
X, Y, Accounts Payable and General Ledger – To Be Legacy  
X, Y, Accounts Payable – To Be New  
Discussions with overall stakeholders and key resources provides a broad
perspective on the effort.

21. Integrating Lessons Learned
Issue # Examples Improvement Actions
Category Findings
Project 7 • Project timing didn’t take into account • Project plan includes post-go-live support
Management quarter and year-end close periods effort
• Changeover leadership didn’t involve • Include To Be Legacy active involvement as
business unit stakeholders and on Steering Committee
Training 11 • Insufficient training resulted in lack of • Emphasize change management work
adoption and frustration stream as key component of overall plan
• No documentation or flowcharts for new • Provide documentation, processing
processes timelines, and flows for new processes
System 13 • Work Authorization as configured • Perform detailed fit-gap to determine areas
doesn’t block overcharging of customization
• People in secured sites can’t access • Review infrastructure access as a part of
the portal overall plan
Process 13 • ODC’s are still being charged to wrong • Focus on detailed conversion strategy and
projects resulting in long-term cleanup process mapping to new environment
• W-9 information was required but that • Perform process fit-gap to minimize
wasn’t clear ahead of cutover surprises
Applying lessons learned from previous projects reduces overall risk and improves
chances of success.

22. Change Management: Content Assessment
Functional Area Training Factors Used to Determine Content Complexity
Complexity
(High/ Medium/
Low)
PCB – Contracts High • Due to downstream dependencies on accurate Contract setup, it is critical to
address with a robust training effort.
• More than half of the evaluated processes were determined to be impacted either
to a medium or high degree.
Project Controls / IFR Medium • Moving from an offline request, approval and tracking system for IFR’s to an online
system.
• New sources for reports. Project Managers will be expected to be more self-
sufficient in running reports and/or inquiring on and analyzing data.
Procurement High • Entire process shifts from manual/paper driven to an online process.
• In addition to adopting new policies and procedures, users must learn to abide by
a more rigid structure than would be necessary for an offline document
Time & Labor Low • Most users are already accustomed to completing timecards online, so learning on
a different system of entry is not expected to be complicated
Travel & Expenses High • Entire process shifts from manual/paper driven to an online process.
• Large audience, possessing a wide variety of systems/computer skills, so training
must accommodate a range of skill sets.
• Experience suggests that users require extensive support and/or are slow to adopt
the T&E system unless a comprehensive training approach is taken.
Accounts Payable Low • AP function will be absorbed into the Client’s Center (CC) in where AP staff will
receive guidance from experienced PeopleSoft AP personnel using the a defined
mentoring approach
• Little difference in the data entry effort between to be legacy system and
PeopleSoft.

23. Change Management: Training Needs
Gap Assessment

24. Training Plan
User
Training Status of Prep & Avg Hrs
Functional Area Sub-Function Audience Size Training Notes
Complexity Content1 Delivery LOE /Person
Hrs
PCB – Contracts Setup and Admin High 15 Complete 32 360 24 This includes training all PMs,
Project Control and Contract staff
Inquiry / Reports Low 9 Complete 8 72 8 on new processes, cross-walks and
tools.
Project Controls / IFR All High 20 Project Control Incomplete 240 1,680 24
50 PM
Procurement All n/a n/a n/a N/A N/A N/A Deferred implementation
Time & Labor Entry Low 600 Complete 0 600 1 Training via CBT. No development
or delivery LOE.
Approval Low 100 Complete 0 200 2
Administrator Low 1 Complete 0 4 4
Travel & Expense Entry Medium 300 Complete 0 600 2 CBT
Approval Medium 100 Complete 0 200 2
Administrator Medium 1 Complete 0 4 4
Accounts Payable Inquiry Low 20 Complete 16 80 4 AP will be processed by Shared
Services.
Billing Bill Preparation High 9 Complete 40 288 32
Revenue Low 20 Complete 16 80 4
Recognition
Accounts Receivable All Low 5 Complete 16 20 4
General Ledger All Low 5 Complete 0 40 8 ―Buddy‖ system training method.
Total Hours 368 4,228

25. Training Plan – Key Components
User
Training Status of Prep & Avg Hrs
Functional Area Sub-Function Audience Size Training Notes
Complexity Content1 Delivery LOE /Person
Hrs
PCB – Contracts Setup and Admin High 15 Complete 32 360 24 This includes training all PMs,
Project Control and Contract staff
Inquiry / Reports Low 9 Complete 8 72 8 on new processes, cross-walks and
tools.
Project Controls / IFR All High 20 Project Control Incomplete 240 1,680 24
50 PM
Procurement All n/a n/a n/a N/A N/A N/A Deferred implementation
Time & Labor TrainingEntry
Complexity and Audience Size: Significantly
Low 600 Complete 0User Training Hours: Most trainees were billable to a
600 1 Training via CBT. No development
impacts training medium (e.g. classroom or web- particular project and considerable care needed to be
or delivery LOE.
based) and other logistics Low
Approval 100 Complete 0taken to reduce the revenue impacts due to training
200 2
Administrator Low 1 Complete 0 4 4
Travel & Expense Entry Medium 300 Complete 0 600 2 CBT
Approval Medium 100 Complete 0 200 2
1 3
Administrator Medium 1 Complete 0 4 4
Accounts Payable Inquiry Low 20 Complete 16 80 4 AP will be processed by Shared
Services.
Billing Bill Preparation High 9 Complete 2
40 288 32
Revenue Low 20 Complete 16 80 4
Recognition
Accounts Receivable All Low Prep and Delivery Level of Effort (LOE): Impacts the
5 Complete 16 20 4
training timeline
General Ledger All Low 5 Complete 0 40 8 ―Buddy‖ system training method.
Total Hours 368 4,228

26. Existing Tools Assessment

27. Data Conversion Assessment

28. Fit-Gap Analysis: Process

29. Fit-Gap Analysis: BI
Where gaps existed, recommended solutions were developed and effort assessed.

30. Fit-Gap: Legacy Systems
Degree of Fit
No to-be legacy system requirements
with zero fit to the new system.
10 Partial
Full
5
None
0
Gap solutions developed using
multiple toolkits:
• Process Change
• PeopleSoft Report
• COGNOS Report

31. Fit-Gap: Reporting
Key Roles and Activities
Resource Types Required to Meet Report Resources
• Separate direct and B&P projects on the summary
To-Be Legacy Gaps dashboard
• Include all projects on dashboard that have current year
activity
• Add MTD and YTD cost, revenue, and profit information
on the dashboard
• Add operating unit and operating structure 2 as details
• Add total project value
200
System 1 Resources
COGNOS • Develop PSR—Off-site labor breakdown query
80 PeopleSoft
Functional Resources
Functional • Create design documents
784 • Create test cases
• Execute tests
• Create documentation/resolution of test problem reports
Training
• Tasks and effort are accounted for in the Business
Process section

32. Cutover Assessment
Two alternatives are being considered and evaluated based on functionality,
cost, and risk.
Option 1: Cut over to-be legacy to PeopleSoft starting with Accounting Period 8
– Processing begins in PeopleSoft during the eighth accounting month (August). Cutover
would occur after July closes (~7/28). This option will involve more external resources
and pose a higher risk.
– By going live in August, Finance will have 60 days to identify conversion issues and
30 days to identify issues with any errors in monthly processing.
Option 2: Cut over to-be legacy to PeopleSoft starting with Accounting Period 10
– Processing begins in PeopleSoft during the 10th accounting month (October). Cutover
would occur after September closes (~9/25).
– Reduced external cost, although external resources will still be required.
– If the project is delayed beyond Period 10, will need to pay for additional SOX
compliance testing for both to-be legacy and to-be new processes/systems.

33. Option 1 Requires Nimble Execution, Given
Accelerated Time Frames
Timeline Assumptions
• Go-live scheduled for end of July for the August cycle
• Project starts June 1
• 5-week design/development window minimum
• 5 weeks for testing and change management/training

34. Option 2 Provides Additional Time, Lowering
the Overall Risk of the Project
Timeline Assumptions
• Go-live scheduled for end of September for the October cycle
• Project starts June 1
• 9-week design/development window
• 9 weeks for testing and change management/training

35. Option 2 is the Better Path

36. Finally, we needed to execute . . .

37. Phases and Associated Phases in ERP
Integration

38. The Implementation Team and the Role of
Change Management
CEO
Implementation Change Mgmt
Lead Lead
Implementation Implementation CFO COO CIO
Team Team
(Technical) (Functional)
Key: Business Unit 1 Business Unit 2 Business Unit 3
Leadership Leadership Leadership
Implementation Team
Change Mgmt Team Lead
Change Champions
Business Line Change SMEs
End Users End User End User End User End User End User End User

39. Common Mistakes
Not incorporating key stakeholders into the project early
• If concerns from key business leaders are not addressed early, resistance will materialize
and sink any well-intentioned efforts
• Getting key stakeholders on board early will help in obtaining acceptance from the rest of
the organization
Uncoordinated communications and training
• Often, these two areas are not addressed effectively and are implemented as an
afterthought to the project plan
• Communications and training need to be planned well in advance with the audience in mind

40. Q&A

41. How MorganFranklin Can Help
For more information:
John Hoebler, Director, ERP
MorganFranklin Corporation
office: 703.564.7525
e-mail: erp@morganfranklin.com
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