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PS Deal Module Utilization v9.0 Case Study - AEP. Rick Gray [email protected] Contents. AEP – Company Overview Project Scope PS Enterprise Deal Module Overview Purpose of the Deal Module AEP’s Scope of Delivered Functionality Deal Module Flexibility vs. Complexity AEP Customizations

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Contents
Contents

  • AEP – Company Overview

  • Project Scope

  • PS Enterprise Deal Module Overview

    • Purpose of the Deal Module

    • AEP’s Scope of Delivered Functionality

    • Deal Module Flexibility vs. Complexity

  • AEP Customizations

  • Known Deal Module Issues

  • Requests for Improvements

  • Review and Summary

  • Questions


  • Aep company overview
    AEP – Company Overview

    • American Electric Power has been providing electric service for more than 100 years and is one of the nation’s largest electric utilities, serving in 11 states.

      2009

      • Revenues (in billions) $13.5

      • Net Income (in billions) $1.362

      • Service Territory ~200,000 Square Miles

      • Total Assets (in billions) $45.2

      • U.S. Customers (year-end) 5,213

      • Employees (year-end) ~20,000


    Project scope
    Project Scope

    • PS Modules: AP, AR/BI, GL, Treasury, Project Costing

    • Technical Upgrade

      • Reapply customizations, unless no longer required

      • No new functionality, unless replaced customizations

    • Technical Scope

      • Double upgrade from 8.0 -> 8.9 -> 9.0

      • 5,358 Functional Requirements

        • 441 Customizations (Work Units)

          • 18,204 PeopleSoft, 222 non-PeopleSoft Objects customized

          • 49 Customizations for Deal Module


    Deal module scope overview
    Deal Module Scope Overview

    Prospectus

    Bond Issuance for

    ABC Company

    Issued: June 1st, 2009

    $50,000,000

    5%

    Interest Payment Monthly

    Matures 30 Years

    Calculates the dollar transactions (Cash Flows):

    Original $50M Cash Receipt

    Monthly Interest Accruals and Payment $208,333.33

    Maturity $50M Repayment


    Deal module scope overview1
    Deal Module Scope Overview

    • Generates Cash Flow:

    • $50,000,000 on June 1, 2009 in Bank Account 123456

    • Cash Balance is integrated with Cash Module for Cash Position.

    • Feeds into Bank Reconciliation.

    • Expenditures feed into Financial Gateway for disbursements

    • Generates Accounting:

    • Cash $50,000,000

    • LT Debt $50,000,000

    Calculates the dollar transactions (Cash Flows):

    Original $50M Cash Receipt

    Monthly Interest Payment $208,333.33

    Maturity $50M Repayment

    Company ABC’s total debt is increased by $50M.

    Visibility to understanding the total debt of ABC.


    People books description aep utilization
    People Books Description-AEP Utilization

    Deal Management provides the following business processes (items in gray are not used at AEP):

    • Instrument type and instrument template creation and maintenance.

    • External and internal deal creation and maintenance.

    • Trade tickets creation and maintenance.

    • Securities creation and maintenance.

    • Undo deal functionality.

    • Deal confirmation, administration, and reevaluation.

    • Deal portfolio management.

    • Deal collateral administration and review.

    • Equities creation and maintenance.

    • Deal Fees


    Deal flexibility
    Deal Flexibility

    • Financings are varied, complicated, and change

    • The Deal Module attempts to meet the needs

    • At AEP we only use two Types

    • Flexibility within types


    Flexibility vs complexity
    Flexibility vs. Complexity

    Prospectus

    Bond Issuance for

    ABC Company

    Issued: June 1st, 2009

    $50,000,000

    5%

    Interest Payment Monthly

    Matures 30 Years

    • Issue Date June 1 –

      • Bonds rarely settle in issuance date

      • Settlement vs. Coupon Start vs. Issue Date

    • Interest Payment Date

      • Frequency

      • Initial Payment period long or short

      • Weekend and holidays

    • Interest Calculation

      • Day count basis (30/360, Actual/365, etc..)

      • Interest Bearing, discounted, compounding, arrears, etc..)

    • ETC… , ETC… and so forth

    Bottom line – There are several variables and combinations that change the derived cashflows.


    Aep deal customizations
    AEP Deal Customizations

    AEP added customizations for the following processes:

    • Accuracy:

      • Deal Approval Workflow

      • Accounting Review and Approval

      • Undo Accounting

      • Unroll deal functionality

      • Deal Deactivation and Link new deals

      • Lock cashflows after accounting has ran

      • Unlock Settlement Instructions and Description for Spawned Deals (Sell Buyback and Rolls)

      • Key Deal Indicator Report – Lists and Compares Data between deals

    • Efficiency:

      • Auto Roll functionality

      • Deal Import (Short Term Debt and Investments)

      • Deal Templates – Added Settlement Instructions for cashflows


    Aep challenges with ps deal module
    AEP Challenges with PS Deal Module

    • Deal Challenges:

      • Complexity – Lack of Documentation

      • Deal Locks once entered

      • Accounting Locked for Life of Deal

      • Cashflows Inflexible

      • “Equity” Recorded in PS is only the Investment Side

    • AEP Identified Bugs:

      • Interest accruals on partial sell buybacks

      • Interest Overrides with Purchased Interest

      • Short / Long Initial Interest Payments on Amortized Loans

      • SWAPS – Cashflow Processed as MAN do not pick-up Accounting

      • Cashflows Editable for Investments after Accounting Occurs


    Request for improvements with deal module
    Request for Improvements with Deal Module

    • AEP’s Wish List:

      • Documentation! – Detail User Manual

      • Fix known Bugs and Improve QA on Releases

      • Allow Deal Editing until Accounting is Posted and/or Bank Reconciled

        • Un-Approve Cashflow

      • Allow Changes through Life of Deal

        • Accounting Template, Settlement Instructions

      • Simplify Entry

        • Perhaps VRDN, Money Market, CP etc.. Independent Entry Screens

        • Allow unscheduled interest and principal payments (up and down)

      • Instrument Templates should include Settlement Instructions

      • Undo and Redo (Accounting, Roll, Sell Buyback, etc..)

      • Rate Reset from import should update deals without visiting each deal

      • Approval workflow for Deal Cashflows

      • Process to require approvals on changes to settlements instructions

        • Changes made to settlement instructions should be flagged as unapproved

        • Cashflows with unapproved settlement instructions should not process


    Questions?

    Rick Gray

    AEP Cash Management

    [email protected]


    Appendix

    PeopleSoft Deal Module Utilization v9.0 Case Study - AEP

    Rick Gray

    AEP Cash Management

    [email protected]


    Appendix A – AEP Custom Deal Approval

    Deal Process and Approval Workflow

    Summary Page


    Appendix B – AEP Custom Deal Workflow

    Deal Workflow Setup by Portfolio


    Appendix C – AEP Custom Undo Accounitng

    Deal Undo Accounting Entries




    Appendix F - AEP Custom Deal Import

    Deal Import Staging Table



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