How to successfully separate and set-up HFM for a new company

Ray Chontos Kathleen Marschak

Finit Adient

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Leader in Oracle Hyperion SolutionsLeader in Oracle Hyperion SolutionsLeader in Oracle Hyperion SolutionsLeader in Oracle Hyperion Solutions

� Ray Chontos (rchontos@finit.com)

● 19+ years of Hyperion Experience

● HFM, FDM, FCM, Financial Reporting, Smart View, DRM, Hyperion Enterprise

● Project Manager and HFM Design Architect

� Kathleen Marschak (kathleen.m.marschak@adient.com)

● 14+ years of Hyperion Experience

● HFM Products, Hyperion Enterprise, COE Operations, Release Management & Compliance

● Adient HFM COE Manager

About the Presenters

� Review the process and methods to support the dismantling

of one of the largest HFM environments in the world

● Untangle Johnson Controls Environment / HFM Apps

● Creation of Adient HFM● Infrastructure

● Application Design/Build

● Data Reconciliation Approach/Challenges

● Integration

● Parallels /Go-Live

● Adaptation of business requirements to ‘Become Adient’

● Adient Today

� Questions

Agenda

� Johnson Controls (JCI), a Global multi-industrial company, had core business in the automotive, building and energy storage industries

● Founded in 1885

● 170,000 Employees

● 150+ Countries

● $37B in Sales

JCI / Adient History

Delivering technologies and

services that increase efficiency and

lower operational and energy costs

in buildings..

The world’s largest manufacturer of

automotive batteries, powering

nearly every type of vehicle.

A global leader in automotive

seating, overhead systems, floor

consoles, door panels and

instrument panels.

Automotive Experience Power SolutionsBuilding

Efficiency

� In July of 2015, JCI Executive Leadership announced that the Automotive BU was not a future core business, and the Business Unit was going to be spun-off to a stand alone company

Adient Birth

.

A global leader in automotive

seating, overhead systems, floor

consoles, door panels and

instrument panels.

Automotive Experience• 75,000 Employees• 33 Countries • $16B in Sales

� One of the largest HFM environments in the world

● Five Integrated & Two Stand-alone Applications

● 3,600 Users World-wide

● 60,000 + Unique entities

● 16 Entity structures

● 6,300 + Accounts

● 40 + Scenarios

● 200 + G/Ls loaded / FDM locations

● 150 changes per month in average releases

● 60 + Servers in the infrastructure

JCI’s Total HFM Footprint 2015

� One of the largest HFM applications in the world

● AEHFM – Automotive Experience HFM

● 1,600 Users from 33 countries

● 20,000 + Unique entities

● 4 Entity structures

● 2,500 + Accounts

● 10 + Scenarios

● 60 + G/Ls loaded / FDM locations

● 40 + changes per month in average releases

� FDM, FR, DRM, EPM Maestro

JCI’s Automotive HFM Application

� Project timeline

December 2015 – December 2016

� Separation project could not impact current JCI Operations and Tyco Merger

� Approach was to “Clone and Go” existing JCI Automotive app to support following key dates:

● Operational day 1 (July 1st, 2016) – Adient operating separately from JCI; Adient leadership and employees identified

● Legal day 1 (October 31st, 2016) – Company is legally separated and begins trading on NYSE

Separation Considerations & Timeline

Automotive Separation Impact � HFM System:

● A new ‘Adient HFM’ to be designed and built

● JCI’s AEHFM application to be retired

� HFM Users/Licenses:● Adient HFM users had to be identified and licenses distributed according to account for

the creation of central functions (Tax, Treasury, Consolidation etc.) which had never been part of the Automotive Business Unit before

� HFM COE Team:● JCI HFM CoE employees had to join the Adient team, resulting in a re-alignment of JCI

CoE

● Adient employees had to support JCI as needed through separation AND be invested in the separation project

� HFM Process & Procedures:● SOX policies and operational procedure had to be adapted:

● Interim Period (July – November): project was audited prior to separation

● Post Go-Live: Adient HFM was audited one month post go-live

Established Project Team Towers

Role

APPLICATION

-Adient App design/build/test

-Historical data conversion

-Performance /UAT testing

-Parallel planning and execution

-Legal Entity Separation HFM Changes

-AE App preparation for separation

-Account Reconciliation (ARM) separation

- JCI AE HFM/FDM application JCI RemainCo

- JCI AE HFM/FDM retirement

PLATFORM

-Infrastructure design & hardware procurement requirements

- Software installation

- System Testing

- Load Testing

- DR/Back-up Plan/Test- Load

INTEGRATION

-Integration Inventory, approach & disposition (Adient vs JCI RemainCo)

-Inbound (SAP Genesis, Non Genesis)

- FDM App design /build/test (HFM/ARM)

-Outbound (BPC, BBP, Tax)

-Integration Testing

SME

Alignment

&Support

Adient and Finit Carve Out Leads

Adient and Finit Application Leads

Adient and Finit Platform Leads

Adient and Finit Integration Leads

Team

Members

PROCESS/TOOLS

Adient and Finit Process Leads

Adient Steering Committee

JCI HFM CoE

Director

Matched Pairs

Throughout

JCI AE Carve Out Adient STAND-UP

Adient and Finit Program Director

- Internal Controls/Audit

- End User Support (Remedy/Portal)

-User Provisioning(ITARIS)

- Change Mgmt/ Governance (Sharepoint)

-Communication/ Portal

FINIT Partner

JCI/Adient Key Resources / Subject Matter Experts

Refocused Project Team Towers

Adient and Finit Tower Leads

JCI/Adient Key Resources / Subject Matter Experts

SIT/UAT

- UAT Scope- Application

Readiness- UAT Task

Plan- SIT- Connectivity

Testing- Tracking/Issu

e Resolution

Parallel

- Parallel Scope and Approach

- Parallel Communication Support

- Parallel Support- Status, Issue

and Resolution Tracking

- Execute CoEParallel

- Parallel Cutover Activities

Cutover/

Hyper-care

- Cutover checklist- Cutover

communications- Full user review

and sign-off for Adient

- Turn off integrations to JCI

- ARM Historical Data Solution

- Adient go-live support

- Adient CoE tools and process transition

COE Standup/

Ops

- Organization establishment

- Define Adient CoE Processes

- Set-up CoETools

- CoE Introduction and Communications with Adient

- CoE Go-Live- EPM Maestro

Joint Venture

- Copy Falcon to Adient environment

- Application Testing

- SIT / Integration- Connectivity

Testing- Cutover and Go-

Live Activities

� After HFM Applications were built and Platform fully tested

the team re-aligned on critical path activities

High-Level Approach & Timing

� New Data Center● Milwaukee, WI to Suwanee, GA

● 2 dedicated VMs for Admin tasks (Release activity)

� Equipment Order/Build● 40 Servers : PROD (21), QA (13), DEV (6) and 10 Servers for DR

● ~ 600 GB of Applications (400 GB for the historical application)

● Physical Servers for PROD, private network setup, all in 2 enclosures

● Environment Readiness Order : PROD > QA > DEV

� Testing● 2 rounds of testing, small/medium/large dataset, user concurrency of 100-400

● Components : SmartView, Data Grids, FR, FDM Loads, HFM Consolidations

� Network separation● 4 rounds of separation tests (firewall rules implemented for TSA applications)

Infrastructure Considerations

Infrastructure – Adient Current

� Server Stat collection

� CPUs, Disc Space, RAM, Memory

� Stress Testing – add users

� WebLogic Service Monitoring

� Deeper than the Services Control Panel

� Log File Consolidation

� Central location for details on network and overall performance monitoring

� Email Alerts

� CPU, Memory Disc Space

� Financial Reports Tracking

� Consolidation Performance Monitoring

� How has it changed?

Performance Monitoring

Finit Performance Monitoring Tool

� Real Time (and Historical) system-wide performance monitoring

� Proactive notification; stress testing

Tests/Response Time – Tests run with 750 users

Tests/Response Time – Tests with 1500 users

LOAD TEST ON PROD FROM MILWAUKEEFor the round 2 full-scale load test we looked to simulate the estimated number of concurrent users in the system. The user count we used is based on the concurrent users that might be logged in for that activity. With this test we are looking to ensure that the performance is consistent and the servers show no signs of stress. At the peak of the test we had 750 and 1500 users in the system performing their work. The activity for this test was users logging in, open app, open a small grid, generating a small SV, and running small consol. The two charts highlight the fact that the response times did degrade as the number of users in the system increased, but the response time showed was a linear degradation:

CPU usage for the 2 HFM app servers

Performance Testing Results

� Major mile stone achieved with the amount of performance testing with notable results

Finit Performance Rules Profiling

● Program that analyzes an HFM Rules file and inserts timers.

● Results show rule execution timings by Sub Routine, Entity, Value, Period, and Scenario

● Profiler reveals the processing cost of each sub routine in your rules file, and pinpoints where to spend time on rules cleanup.

Finit Performance Rules Profiling

Shows how long each rules takes to process

Application Design & Build

New ADHFM App =

AEHFM Shell

New Corp Entities

Corp Accounts

Segment changes

Legal Entity Updates

New CTHFM App =

JCHFM Shell

Segment changes

BU COA

JCI, BE, PS Entities

JCI, BE, PS Accounts

JCI, BE, PS Segments

Data

Design Requirements:

• Central reporting entities had to be split from JCI corporate application• AE Legal entities had to be classified as ‘Share’ or ‘Asset’ sales and set-up in Adient • Corporate accounts and Adient Segments identified to support external reporting

Challenges:

• Creation and tie-out FY 2017 beginning balances with no consolidated source system to tie-back to

• Provide platform for FY16 year-over-year comparison including JCI entities that no longer exist in Adient per LES

FY2016

Historica

l

ADHIST

Recon

Recon

Through Review of Key Design Items

ID Key Decision Alternatives Considerations / Implications Recommendation and Decision

KD-001 Legacy JCI Entities 1. Delete “TOT” entities

2. Keep “TOT” entities

•Keeping TOT entities will allow for easier reporting between Adient HFM and Historical

copy of AEHFM for FY17.

•Keeping TOT entities may have slight impact to Adient HFM performance/consolidations.

Team Recommendation & Rationale:

Analysis performed showed minimal impact to

consolidations. The benefit of easier reporting

between the two HFM applications outweighs

the minimal performance impact.

Decision Taken:Keep TOT Entities

KD-002 Delete GCOA from

Adient HFM

1. Delete BUAccount

hierarchy and only

keep GCOA

2. Keep both GCOA and

BUAccount

hierarchies in Adient

HFM

•Each account hierarchy was designed for different reporting reasons.

•BUAccount•Has detail to support manufacturing reporting in COS and SGA.

•Has distinct rollups to separate Admin vs Engineering expenses.

•GCOA•Designed to support external reporting with distinct rollup of

accounts.

•BUAccount and GCOA tie at higher levels (Seginc, Sales, COS, SGA for example).

•Having both account rollups has no impact to HFM consolidation performance.

Team Recommendation & Rationale:

Both account hierarchies are needed to support

management and external reporting the way

they are currently designed.

Decision Taken:Keep Both GCOA and BUAccount CoA

Hierarchies in Adient HFM.

Corporatizing Adient HFM

Functional Area Description of Change

Security• Add security to separate access from Adient

Operations, Adient Corporate and Adient Total

Corporate Entities• Add entity hierarchy to support Corporate functions

•Examples: Tax, Treasury, HR, IT, Finance, Legal

Corporate Accounts

• Add additional Accounts to support Corporate/External reporting

•Examples•Goodwill Impairment, Medical Clearing, Savings Investment Plan, Common Stock External, Tax Receivables, Deferred Compensation

Corporate Allocations

• Allocate Corporate functions to External Segments

ICP Changes• Non-Adient IC partners will be removed from Adient

HFM (JCI RemainCo, PS, BE, Corp)

Beginning Balance & Data Recon

Beginning Balance Requirements:• FY16 Sep YTD to naturally populate FY2017 Adient opening balance sheet

� Parallel data must be fully validated; required finance sign-off� Adjustment entries done using outside consulting system (KART) had to be

reflected in Adient HFM � Finance moved Retained Earning to Additional Paid in Capital (APIC) as

required• October 2017 had to be accurate in ADHFM to support Quarterly filingsData Reconciliation Approach:• Process was to tie back to source systems for legal entities/profit centers

• Many to one profit centers had to be accounted • Asset sale entities had to be accounted for where not all the balances moved

Data Recon Challenges

� Spin-off was based on Asset and Share Sales of Legal Entities� Adient didn’t receive everything it once had

� There was no “Total” to tie back to

� Data recon highlighted additional transactions between Adient and JCI

� Approximately 50 Entities were added back to Adient as result of data recon

� Entries needed to complete the sale/purchase

� 48 ERPs, 95 FDM Locations

� 198 Auto-loading entities (flat files bypassing FDM mapping)

� Network changes

� Source ERP database moves and domain changes

� Processes to support 2 environments

● Had to send data to both JCI and Adient until legal split final

Integration Overview

Integration Flow &Timeline

July – Oct:

Parallel Month-

Ends

Close Books in Both Adient & JCI

Integration Testing Round 1

- IT Personnel- Only ERPs w/ Auto-

Transfer or Auto-Load- Technical and Connectivity

Tests

Integration Testing Round 2

- BU/Local Finance Teams- All ERPs / Sources (including

manual loaders)- Full End-to-End: Extract, Load

& Validate Data Mappings

“Final” Updates: Adient & JCI HFM & FDM

Co-

Existence

model to

support

data

integration

between

JCI and

Adient

Critical Path

Key Business Readiness Gates

Project Team Readiness Gates

� Critical Path

● Parallel data is “real” –will be used at go-live

● Go/No-Go not an option, the legal separation was happening

● Application changes to support growing requirements

Parallel Success Criteria

� HFM Team had to support 4 parallel closes between July 1 (Operational Day 1) and October 31 (Legal Day 1)

Parallels

• AE BU had to close “as-is” with current processes/HFM systems through October FY17

• Adient began parallel closes on Day 8-12 for July – October month ends

Communication Strategy

Purpose ContentStakeholder

(Audience)

Delivery

Method

Schedule/Timin

gDeveloper Owner

Steering Committee

Make decisions

Escalate issues/risks

Share program status

Status scorecard

Key decisions

Change Impacts

Issue escalations

SME requirements

Adient Finance

Leadership

HFM program team

Meeting Once a month Kathleen

HFM program team

& select Finance

team members

Cyclone IT

HFM Program Status

Review IT status for program pillars

Escalate issues/risks

Information sharing

Pillar scorecards

Topical material

IT HFM Program

TeamMeeting Twice a week Pillar leads Sudhir Nambiar

AE Ops Parallel Kickoff

Meeting

Provide guidance and timing on

upcoming UAT / Parallel

Parallel Overview to AE

finance leaders Finance Leaders Meeting May 23rd Todd Todd

Adient HFM

Program Overview

General awareness

Expectation Setting

Drive engagement

Expectations and Timing

of Parallel Close activities

All Adient HFM

usersEmail June 30th Todd/Greg Mark Skonieczny

SIT #2 Testing OverviewInform & engage data loaders for

Integration Round #2 testing

Expectations and Timing

of SIT#2 testing Data Loaders E-Mail July 1st Chris Todd / Manuel

Parallel Testing AE Ops /

BBP

Provide timing, expectations and

success criteria of Parallel

Detail Task list and timing

of completion.

All HFM Users -

General HFM

Month end User -

Task List

BBP Users

E-mail July 22ndChris/Ray&

ToddTodd

Parallel Testing Corp HQ /

Consolidations/Tax

Provide timing, expectations and

success criteria of Parallel

Detail Task list and timing

of completion.

All Corp Adient

Users/Consolidatio

n team and Tax

E-mail July 22ndChris/Ray &

ManuelManuel/Greg

Parallel Report Out

Report of issues, process changes

and lessons learned to support the

next parallel.

Parallel Report Card

All Corp Adient

Users/Consolidatio

n team and Tax

E-mail After each

parallel

Robert/Tod

dTodd/Greg

Go-live

Cutover/Transition

Notify users of system downtime

and activities that are leading up to

final cut-over and ADHFM system

availability. Select key areas to test

prior to system availability for all

users.

Adient HFM COE portal

presence introduction. All HFM Users

E-mail / Steering

CommitteeNovember 11th

Kathleen /

AmitKathleen

Process Model to Support Adient

� Adient’s Executive leadership required the following changes prior to go-live:

● CoA updates and new management hierarchy ● Separate QA application developed and built in parallel

● New reporting changes were released prior to last parallel Month-End Close

● Standard Smart View reporting package based on new CoA and Management reporting structure

‘Becoming Adient’ Reporting Requirements

Adient Today

� Dashboard Reporting

● Adient has implemented CXO Cockpit to meet Executive business requirement of creating a standardized reporting deck and mobile dashboards

● Project was executed in January with positive feedback; initial user pilot was higher-level leadership

● CXO Tool has been extended to additional 200 users based on successful pilot

Adient Today

� Local GAAP Repository / German Consolidation

● Adient HFM currently stores only US GAAP data

● Project allowed the load local statutory balances into HFM for all Legal Entities

● Benefits● Improves efficiency; allows a consolidated tax return for

Germany (30+ legal entities)

● Centralizes data into HFM instead of multiple ERP’s

● Allows easy comparison to US GAAP data

● Application went live in September support FY2016 and FY2017 reporting

Adient Today

� Futuris acquisition

● Completed in September 2017

● Integrated 15 operational facilities into Adient HFM reporting

● Data loaded from Futuris HFM application

● Long term vision is to add to Adient’s G/L system and load directly to Adient HFM and decommission FuturisHFM

Lessons Learned / Success Factors

� Business Partnership● Strategic alignment with key IT and senior Finance Leadership

● Standard cadence of meetings and status reporting

● Effective Steering Committee participation which provided key support and fostered quick decision making

� Exceptional change management

� Finit consulting partners had previous exposure to JCI HFM footprint and agile attitude

� Excellent JCI/Adient Team

Questions and Answers

Ray Chontos

� rchontos@finit.com

Kathleen Marschak

� kathleen.m.marschak@adient.com

www.finit.com