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BSNL ERP Implementation Project

Cut Over Strategy Transactional Data

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
Only manual transactions are carried out during the blackout
period and need to be created in SAP during reconcile 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

Ex- Open PO from T-One

Data that are go-live critical and non-go-live critical

Ex- For PM (COA, MM, Work Centre, ACS)

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


Financial Accounting

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.

Cut Over - Master Data


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

Real Estate Management

Real Estate Objects Land, Building, Staff Quarters, Towers


Real Estate Contracts
Business Partners Customers and Vendors

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

Cut Over - Master Data

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

Procurement Activities
Open Purchase Order

Only POs that are completely unexecuted will be created in SAP with full values and
quantity.

Partially executed POs 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 POs 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 POs and
SAP pricing procedures for POs to be carried over in SAP.

In Legacy system, Invoice verification should be complete for the goods received till
cutover date.

Procurement Activities
Open Purchase Order

Where it is not possible to complete invoice verification for open GRNs 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 GRNs.

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.

Procurement Activities
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


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.

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.

Project Systems Internal Projects


Budget

Entire Capital Budget shall be maintained in SAP


For Projects 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).

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


Actual Expense (Previous Year)

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).

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

Open Notifications

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 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


Human Resources
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


process but can be updated later

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


process but can be updated later

Financial Accounting
Open Items in Vendor Accounts

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.

Financial Accounting
Open Items in Customer 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.

Financial Accounting
Inventory Values

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

Financial Accounting
Fixed Asset 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.

Financial Accounting
Capital Work in Progress

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

Depreciation

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.

Financial Accounting
Other Open Items

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 .

Financial Accounting
GL Account Balances

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)

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.

Questions and Answers?

Thank You