trusted business advisor march 23 rd, 2010 finance & accounting considerations for an...

Trusted Business Advisor


March 23rd, 2010

Finance & Accounting Considerations for an Implementation or Upgrade

Presented By: Andy Vitullo, C.P.A.Principal, Logan Consulting


Target Audience for this Presentation

• Chief Financial Officers• Vice Presidents of Finance• Controllers• Accounting Managers • Project Managers


Who is Logan Consulting?

• Logan Consulting is a professional services firm committed to helping businesses get the most from their information technology investments. Since 1992, we have been helping companies develop and execute business management and information systems strategies...from ERP selections and implementations to e-business planning to strategic IT applications.


Who is Logan Consulting?

• Operating throughout North America, our clients are equally diverse...from global Fortune 100 companies to regional manufacturers...in both process and discrete industries.


BIO: Andy Vitullo

• Principal (Owner) @ Logan• Program Management / Project

Management• Consultant, Controller, Accounting

Manager, Tax Preparer, Auditor.• CPA, State of Ohio• BS, Accounting –• An Implementer of ERP with over 15

Years of Experience.


Enterprise Edition vs. Standard Edition Financials

• Criteria for EE– Global Operations.– Desire to Build Normalized GL across the

Enterprise.– GL Support Multiple Reporting views by

Jurisdiction• Primary Layer , Management Layer, Transient

Layer– Inter-domain Financial transactions Supports

Multi-Jurisdiction Shared Service Organizations• AP, AR, GL across domains.



• Implementation of EE– Software functionality is completely different than MFG/PRO financials.– Implementation Timeline is dependent upon organization size and

number of sites to deploy.– Cannot assume a technical upgrade. – .NetUI user interface only for Financial Software. – All Aspects of Implementation need consideration (4 to 6 month

timeline)• Scoping and Planning• Core Team Training• Business Process Definition• Data Conversion• Conference Room Pilot• User training of functionality• User training of User Interface



• Criteria for SE– Plant focused GL.– Country Jurisdiction focused within a domain.– Is the organization part of a multi-national?– Is there Enterprise Level Financials already

deployed (PeopleSoft, Oracle, SAP)?– Inter-Domain functions include DRP and EMT.

• Technical Upgrade – Technical focused , not functionally focused.


Fundamental Assumption

• “Financial Organizations including the accounting function and Financial, Planning and Analysis are the organizations that “report” the business both internally and externally. Their most reliable and understandable sources of data is from their general ledger. Insure the structure supports users of the financial results”.


Major Considerations

• How can I optimize my Financial Reporting environment to efficiently produce statements from the organic data in the general ledger?

• What are the true business drivers of the company that require reporting and analysis?

• What are the bottlenecks to an efficient seamless general ledger accounting close?

• Do I deliver timely feedback to the organization in the form of management reporting so the business managers can make cogent informed business decisions?

• What are the financial processes to be considered in Scope?• Is my finance and accounting organization sized properly for my

current business environment and future growth? • Is the Internal Control environment stable or in need of enhancement.

How can I leverage this project to comply with Sarbanes-Oxley?


Implementation or Upgrade

• Since the company will make a significant investment for in either case, Financial Leaders should insure their investment is optimized in their ERP system .

• Participate at all levels of the Project including steering committee, project management and project team.


General Ledger StructureDomains & Databases

• Significant Deliberation should be considered in making this decision.

• Multiple Domain’s or Databases fundamentally increases the support cost post implementation.

• Multiple Domain’s require consolidation tools.



• Operations Across International Borders are generally the tipping point into a multiple domain configuration.

• Multiple Business Units with different functional Currency

• Operational Differences between Business Units.



• Financial Organization Benefits from a Single Domain configuration. – Single General Ledger– Single Data Source for Financial

Reporting – Transaction Processing (AR/AP)

functions are less complex.


General Ledger Structure - Entities

• Entities support basic Balance Sheet and Profit and Loss Financial statements

• How Many Reportable Entities are Required.– Legal Entities– Operation Entities

• Can you Build an appropriate Entity Hierarchy to support the legal entity reporting requirement?


General Ledger Structure - Accounts

• Up to 8 Alpha-Numeric Digits in QAD.• Should Support the Basic Balance Sheet

and Income Statement Structure. • Other Considerations

– Statement Of Cash Flow requires;– Beginning Balance, Additions,

Deletions and Transfers Structure.



• Inventory, Sales, Standard Cost of Sales and Other Cost of Sales Accounts should be reflect structure to measure performance including:– Inventory Turns by Product Lines.– Profitability by product line. – Does Sales Accounting align with the

organization?



• Do Your Sales and Marketing Leaders Agree with your reporting points for Sales?– Sales and Standard Cost of Sales By

• Customer Grouping (Domestic, Int’l, Interco)• Customer Market (OEM, Distributor, Retail).• Product Groupings. • Shipping Source• Sales Channel.



• Do you measure product line profitability?• Is your Product management organization

aligned with your product lines?• Who is responsible for the product line

performance?– Do you measure material efficiency variances?– Do you measure supplier variances from

product procurement. These variances deflate your anticipated margins.


General Ledger StructureSub Accounts and Cost Centers

• Sub Accounts and Cost Centers can be used to further sub categorize your GL account by:– Jurisdictions for tax filings– Departments for expense

classification– Product Line – Customer Markets


Changing Charts of Accounts(for an Upgrade)

• COA Change Software. – This software tool allows your

company to change from an old account structure to a new account structure across the entire database.


Where will you Consolidate?

• Consolidation Tools include:– QAD– Hyperion Financial Management– Khalix

• Do you have legacy systems with different chart of accounts? Is the mapping problematic?


Closing

• 1 day close?• General Ledger Interfaces?

– Payroll– Purchasing Cards– Freight Management– Travel Cards– Fixed Assets and Depreciation Expense

• Multi-Entity Journal Entries


Closing

• Journal Entry Upload Tool. See me after this presentation.

• Managing the Calendar to “control” sales cutoff.

• What is your materiality level? Are you booking $1 entries?


Reporting

• Report ! Report ! Report ! • As finance organizations, you most

important function is to provide timely reporting to your internal organization and external customers of the financial statements. Early on, in your implementation or upgrade, you should vet your current reporting package with management team to assure the reporting function is meeting current needs.


Reporting

• Question of the organization should include:– Is the reporting timely? – Is the reporting meaningful? – What are the reports that you use for the

purpose of managing the business? – What reports do you need to better

manage the business?


Reporting

• ERP technology provides your business the opportunity to report the business between month-end accounting closes. Daily postings to your general ledger provides your company with a bounty of data to turn into meaningful reports. Operationally, are you looking at?

• Purchasing variances? These variances can point to a number of issues including rising material costs or inaccurate purchase order data. Understanding the buying market timely may allow your management to better source materials, through alternate suppliers or to negotiate more favorable terms in contracts. Better payment terms, quantity discounts, etc… can mitigate or negate the cost of rising material cost over time.

• Manufacturing Material Variances? Maintenance and Repair costs for your manufacturing floor. Why does it typically cost the business more component material than anticipated? Did you notice a spike in equipment repair?


Reporting

• Accessibility to reporting is key. How do you managers access their reports? – Are you pushing these reports out via email

or to a file server?– SharePoint site for reports.


Reporting

• Finally, have you established a feedback loop in your reporting environment.– Do you sit with the management

team to review the results? – Do you require the management

team to explain their variances? – Are managers responsible for their

revenue targets? Cost targets? Budgeted expenses?


Internal Control Environment

• A good time to review your security.• Security Model is user group based in

Domain version.• Align users to users groups to insure

compliance with internal control environment.

• Tools– Menu, Site, Entity, Field Security– .Net Tools for Security


Upgrade Timeline and Costs Factors

• Technical Upgrade – Base of 90 days• Customizations Extend the timeline

– Remediation effort includes – budget 2 hours per• Global Domain Conversion.• .NetUI Compliance• Unit Testing

– User Acceptance Testing – Users must be engaged

• Number of Interfaces Extend the timeline


Upgrade Timeline and Costs Factors

• Server Upgrade to 64 bit OS• Progress Upgrade to 10.* requires

the code to be recompiled.– Anticipate High Value , High Priority

program Testing.

• Internal Resource Mix.• Competing Projects.


You hold the Secret Decoder Ring

• As finance leaders you hold the key to well informed and well managed organizations


Thank You

• Andy Vitullo• Logan Consulting • www.logan-consulting.com• [email protected]

• Go Zips

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