cutoverstrategy - Copy.ppt

Cut Over Strategy – Transactional Data
BSNL ERP Implementation Project

Cutover Strategy
 A number of preparatory activities need to be carried out to make
smooth transition to a new operational system in the live production
environment.
 The Cutover Strategy seeks to
 explain the steps that need to be taken
 draw a schedule for the tasks and activities that need to be completed
before transition
 Specify pre-requisites and business decisions required to ensure a
smooth transition

Cutover Strategy - Transition
 Transition to SAP ECC involves
 Execution of all transaction processing from the Go-live date in
SAP ECC system
 Switching off all legacy systems for transaction processing from
start of Blackout Period
 Ensure no manual transactions are carried out during the
blackout period

Cutover Strategy - Prerequisites
 Pre-requisites for Transition
 System Configurations complete
 System Testing, Roles & Authorisations, End User Training Complete
 Ensure all the number ranges for all the modules have been maintained in the
production system
 Training for Super users and end users completed
 Upload tools wherever applicable are tested and ready
 Transfer/creation of all necessary master data in SAP ECC system (Material
Masters, BOM, Routings, Vendor, Customer, Operation and Collection Bank
,GL Accounts, Employee Master)

Cutover Strategy – Business Decisions
 Some important Business Decisions required
 Stages and levels at which open documents need to be taken
over in SAP ECC system
 Data that are go-live critical and non-go-live critical
 Assessing resource requirements and allocation of resources to
supplement efforts of the core team
 Recognising limitations on historical data availability
 Reconciliation of open items with General Ledger
 Feasible dates for cessation of operation in business critical areas

Cutover Strategy – Business Decisions
 Black out Period
 A smooth transition may warrant a complete suspension of
business activities for a few days in order to control the switch
over process and steer the organisation to its new roadmap in the
ERP environment.
 Communicate the blackout period to all major vendors & customers.
 Communicate the importance of Cut-over activities & the blackout
period internally within the organization

Cutover Activities – Proposal

Cut Over - Master Data
 GL Accounts – Group Chart of Accounts and Operation Chart of Accounts
 Bank masters (Collection and Operations Banks) needs to be created in system
 Fund centre and commitment items needs to be created in system.
 Investment programs and structures needs to be created in system
 Vendor Masters including Employee Vendor – the finalized vendor masters including
all relevant details for Sales Taxes, Central Excise, Withholding Taxes Payment
Terms etc.
 Input and Output Tax Codes
 Custom Table – Electricity master needs to be maintained for each and every
electricity connection
 Note: Asset Masters have not been included as they are technically categorized
along with Asset balance upload.
Financial Accounting

Controlling
 Cost Centers – The standard hierarchy of cost centers together with all the constituent cost
centers for BSNL
 Internal Orders, BTS / Exchange wise and others needs to be maintained in the system
Material Management
 Material Masters – all SAP material master codes, together with the information required for the
different views
 Service masters needs to be maintained in system.
 All CIN Masters like Central Excise Chapter Ids and relationships to be maintained at various
levels and Tax Condition Records
Real Estate Management
 Real Estate Objects – Land, Building, Staff Quarters, Towers
 Real Estate Contracts
 Business Partners – Customers and Vendors

Sales and Distribution
 Customer Masters – the finalized Customer masters to be present in the system including all
relevant details for Sales Taxes, Central Excise, Payment Terms etc.
 Sales Condition Records for Prices, Discounts and Taxes
 Customer Credit control masters along with credit limit needs to be maintained in system.

Procurement Activities
Open Purchase Requisition
 In Legacy system, Convert all open PR into Purchase Orders for procurements that need to be
committed for business requirements and Close all open PRs that are not approved.
 No open purchase requisitions will be uploaded in SAP ECC system. Purchase Requisition needs
to be created from respective module (PM,MM, PS etc.) in SAP by end users after go-live.
Open Contracts
 Only Contracts that are completely unexecuted will be created in SAP with full values and
quantity.
 Partially executed Contracts will be created in SAP only for unexecuted balance quantity and
value.
 Open Contracts will be created manually or through upload tool based on volume

Open Purchase Order
 Only POs that are completely unexecuted will be created in SAP with full values and
quantity.
 Partially executed PO’s will be created only for balance quantity and value.
 If delivery on open POs is expected during black out period, inform Vendors to expedite
the delivery latest by cutoff date else the PO’s shall be considered as open
 In Legacy system, Short close all POs for which receipts is not expected in future.
 Create mapping between the pricing and other terms and conditions of legacy PO’s and
SAP pricing procedures for PO’s to be carried over in SAP.
 In Legacy system, Invoice verification should be complete for the goods received till
cutover date.

 Where it is not possible to complete invoice verification for open GRN’s the same may be
provided as outstanding liabilities in separate G/L account. After go-live, the invoice received will
have to be entered as non PO financial invoice crediting the vendor and debiting the separate G/L
account made for such GRN’s.
 All excise formalities for taking credit in respect to goods receipt should be completed in Legacy.
 All Vendors and sub-contractors be informed to send their supply for the cutover month well in
advance.
 Open Purchase Orders to be created manually or through upload tool based on volume.
Open Purchase Order

Open Service Purchase Orders
 All Open Service Purchase Orders of the legacy system should be short closed
 In SAP ECC, Service Purchase Order should be created manually or through upload tool based on
volume for the balance unexecuted service.
 Where it is not possible to complete invoice verification for open service entry sheet, same logic of
open GRN to be followed.
GRN for Rejected Material
 Rejected GR will not be considered for upload in the SAP system. Necessary excise reversal and
return of goods to the vendor will have to be made in legacy before go live and only the net
balance in RG23 A/C registers will be considered for upload.
 In case a GRN needs to be re-accepted; the acceptance decision to be taken on or before the cut
off date to be considered for stock upload and steps necessary for normal GRNs be followed as
described above.

Inventory & Production
• No Material Issues/ Transfers/ Receipts/ Returns will be carried out during the Blackout period.
• All Vendors be requested not to send supplies between these dates and expedite supplies for items
required urgently.
• All departments be asked to make estimate of their requirements and requisition the material
sufficiently in advance.
• No dispatches of raw materials or packing materials from Vendor or from BSNL to Sub-contractors will
be made during Blackout Period.
• Break-up of quantity, value, batch /serial no. wherever applicable of Stock needs to be provided for all
materials in order to track them in SAP. If batch numbers are not provided, internal batch numbers will
be used.
• The details of Material stocks lying with Sub-contractor needs to be provided with break-up of quantity,
value, batch no. wherever applicable and Vendor Code. If batch numbers are not provided, internal
batch numbers will be used
• Stock taking, reconciliation and valuation activities for raw material, finished goods etc. be completed
on or before cut off date.
Stocks for all types of materials that are to be dealt with in SAP effective from go live date is required
to be present in SAP system.

Project Systems – Internal Projects
• Entire Capital Budget shall be maintained in SAP
• For Project’s Budget, it is suggested to use ‘Plan Version’ in SAP to capture budget for the total life of
the project. (In SAP, there can be different Plan versions for different purposes but availability control
works on ‘Budget’ figures only)
• In SAP, budget for the Project shall be entered for only; as in SAP, Investment programs for year shall
be created. No history of Capex or Opex budget shall be migrated to SAP.
• For Projects started in fiscal year other than, no budget shall be entered for any period before 1st April--
--. (Plan version shall be used to capture the figures).
Budget
Actual Expense (Current Year)
• Necessary accounting entries shall be posted using appropriate P&L Accounts at WBS element or
network element level
• Other side of the entry will be to a P&L Clearing Account in respective profit centre; offsetting entry will
clear the expenses in P&L Account (Clearing P&L Account will not be a cost element).

Project Systems – Internal Projects
• Consolidated accounting entry shall be posted for the total amount of expenses by using a ‘dummy P&L
account’.
• This account shall be defined as ‘exempt from budget check’ and shall be used only for posting
historical cost on the job.
• Once these costs are posted, this account shall be blocked. Other side of the entry will be to a P&L
Clearing Account in respective profit centre; offsetting entry will clear the expenses in P&L Account
(Clearing P&L Account will not be a cost element).
Actual Expense (Previous Year)
WIP
• As total historical cost has been posted on the project as at cut-off date, project will be settled to
respective asset under construction. At AUC level, it may not be possible to know cost of each type (by
cost element) as costs incurred in previous financial years have been migrated using a ‘dummy P&L
account’.
• At the time of capitalisation of asset from AUC, user will have to refer project cost report for defining
settlement rule. Based on the defined settlement rules, balance shall be transferred from AUC to final
asset
• This exercise need to be done only for migrated projects. For Projects started in SAP, this shall not be
necessary.

Plant Maintenance
• Any open notification shall be completed in the legacy system itself. SAP will be used to create new
notifications only. No historical data of notifications for any technical object shall be migrated to SAP.
Open Notifications
Open Maintenance Orders
• Any open service orders in legacy system shall be short closed and new service orders can be opened
in SAP. No historical data for service orders or service related costs with respect to any equipment or
notification shall be migrated to SAP.

Human Resources – Other HR Data
Area Details Criticality
PA Data for Appointment and Go-live action is critical for Go-Live.
This will be extracted from HRMS. However there will be some
missing fields which need to be filled. Rest of the actions can
be uploaded later.
Most Critical : Required for Go-live
Organizational
Structure
Org Structure of the Circle, Units as of the cut off date will have
to built in SAP as part of Cut Over. This is not available in
HRMS.
Most Critical : Required for Go-live
Time Details All Employee Leave balances , Work schedules as per the cut
off date will need to uploaded.
Critical : This will effect the leave
process but can be updated later
Loans and
Advances
All current loans will be required with their balances would be
required.
Very Critical : Required before the
1st payroll run in SAP and after last
payroll run in HRMS
Claims Claims data for Briefcase and Mobile will be required. Critical : This will effect the Claims
Medical The medical Scheme and any medical re-imbursement would
need to be known
Critical : This will effect the Medical
process.
LTC People who have availed LTC in the current block , their data
will be required.
Critical : This will effect the LTC
Human Resources

 All Vendor open items, whether belonging to previous financial year or earlier, will need to be
transferred to SAP at line item level
 Each line item shall represent an individual transaction like an invoice, a debit or credit note or an
advance or payment etc.
 Special GL transactions like advances and deposits will need to be uploaded with appropriate
special GL indicators and posting keys.
 Payment terms will need special consideration as various open items may be at different stages
of maturity toward due date for payment.
 For open items of vendor accounts, block for payment indicator should be activated. As payment
to vendor will be made on case to case basis.
 In case of all vendors subject to withholding tax, all line items should be uploaded before
application of TDS code in the Vendor master.
Open Items in Vendor Accounts

 All Customer open items, whether belonging to previous financial year or earlier, will need to be
transferred to SAP at line item level
 Each line item shall represent an individual transaction like an invoice, a debit or credit note or an
advance or on account payment etc.
 Transactions like advances and deposits will need to be uploaded with appropriate special GL
indicators and posting keys.
 Payment terms will need special consideration as various open items may be at different stages
of maturity toward due date for payment.
Open Items in Customer Accounts

 Inventory at the cut over date will be uploaded using material master at Plant and
Storage Location level
 Separate GL Accounts will be used for initial upload of inventory for the offsetting
entry. None of the GL accounts used shall be active for budget checks; clearing
commitment shall be assigned to these GL accounts and after data is uploaded,
Inventory accounts shall be assigned appropriate commitment account. Offsetting
account shall be blocked for posting in respective company code.
 Reconciliation will be necessary to ensure that the value of inventories stated
in the financial accounting is in agreement with the aggregate of values
uploaded at material master records level.
 Inventory shall be valued at moving average price at SSA/CTSD level.
 Inventory shall be valued at moving average price for all type of materials
Inventory Values

 The Migration of Assets which are active in Asset Register is a two-step process.
 In the first step, the account balances for the Asset Control accounts would be uploaded as a part
of GL Account balances
 Thereafter, the Asset Masters would be created along with the individual asset wise information
for the following:
 Original Cost of the Asset for Asset capitalized as at cut off date i.e. 31.03.2011
 Accumulated Depreciation of the Asset for Asset capitalized as at cut off date
 Depreciation Charged for Asset transactions occurred between April 1st 2011 to cutover
date
 Original cost of the Assets for asset capitalized during the period from April 1st 2011 to
cutover date
 Additionally, the above information would be also uploaded for the Group Assets to represent the
Income Tax Block of Asset balances.
Fixed Asset Values

 The business will have to identify and break-up the balance in the CWIP account of legacy
system by individual Asset Under Construction (AUCs).
 Internal Orders or Projects would be created for all such AUCs
 No depreciation recalculations will be made in SAP for any earlier periods or years in SAP and
the configuration settings will be made to assign appropriate transfer date and period up to which
depreciation is posted.
 The Depreciation for the last month should be provided and posted in the legacy system (i.e.
Depreciation for the period April-2010 to cut off month end should be posted in legacy system;
Alternatively, Depreciation can be charged in SAP from the start of the financial year and legacy
Trial balance need to be adjusted with this figure.
Capital Work in Progress
Depreciation

 Majority of balance sheet accounts (like TDS payable, certain other statutory liabilities etc) will be
uploaded with their open items; these balances shall be uploaded duly for all line items per GL as at
cut off date
 It is recommended that attempt should be made to clear all such liabilities before cut over date and
reduce the balance in these accounts to ‘NIL’.
 Balance Sheet Open items if unavoidable, in such accounts will need to be transferred to SAP at line
item level and clear subsequently through normal payment (No statutory forms will be available in
SAP for TDS or TCS for the deduction made up-to cut off date).
 In case of Bank balances upload, following steps should be followed
 Bank Reconciliation should be completed in legacy for balances up to cut off date.
 Balances as per bank statement to be transferred to the main bank account.
 Un-reconciled items such as cheques issued but not presented for payment or cheques
deposited but credited shall be transferred to respective bank sub-accounts (incoming/outgoing
payment).
 Business Area wise cash balances as at cut off date will be transferred as a receipt in the
corresponding cash journals.
Other Open Items

 Individual Balances in Profit & Loss GL Accounts will be uploaded in SAP as at cut off date.
 Balances of P&L Account is required at Cost Centre, Business Area and Profit Centre level (i.e.
department/network element, PAU and LOB)
GL Account Balances

Summary
Acceptance of Black out period
Provide business-wise volume of open cutover objects (for example open POs,
Open Sale orders etc.) to enable us to decide whether upload tools need to be made.
Communicate the importance of Cut-over activities & the blackout period internally
within the organization
Communicate the blackout period to all major vendors & customers.
Stock data need to be Complete and Accurate for smooth change over to SAP
Stock/ Customer / Vendor balances/Fixed Asset & other balances to be tallied with
Trial Balance before upload; any differences shall be posted to a ‘Suspense Account’
which shall be cleared post go-live.

cutoverstrategy - Copy.ppt

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