No Split Without Hard and Fast Rules

The city of Wuppertal, Germany is the majority stakeholder in Wuppertaler Stadtwerke AG (WSW AG), its utility, transportation, and waste disposal division. In 2006 it decided to restructure WSW. The city had two major goals in reorganizing the division. The first was to maintain the existing tax structure to finance public transportation (ÖPNV in its German abbreviation) in the future.

The second was to maintain the option for direct allocation of funds in ÖPNV. A request for bids across Europe was unnecessary because jobs were not endangered, and the quality of the services provided by ÖPNV would be maintained. Overall, the restructuring was designed to improve the competitive position of the divisions in the company.

The restructuring created three new companies out of WSW: a general firm, WSW Wuppertaler Stadtwerke GmbH (a holding company), and two subsidiaries, WSW Energie & Wasser AG (utilities and electricity) and WSW mobil GmbH (transportation and transportation services, VSG in its German abbreviation). WSW Wuppertaler Stadtwerke also has an interest in AWG, a waste disposal company.

“The IT project was part of the overall project that restructured WSW. We split the IT project into two parts – one related to SAP and one unrelated to SAP,” says Volker Reinhoff, director of IT at WSW. The expenses involved in the non-SAP portion were about 10% of those for the SAP portion. The project dealt with about 650 software packages, ranging from office applications to drivers. The project also had to adjust forms for invoicing and correspondence.

Splitting into holding, transportation, and utilities

The consequences of mishandling the restructuring in SAP software – especially the sensitive financial accounting data handled by SAP software – were considerable. The data was located in the core of the SAP R/3 software and had to be distributed among the new companies as part of a company-code split. The company code of VSG could be transferred without any changes.

The split of company code 0100 of WSW occurred in two sequential projects. This article covers only the restructuring project: the split into holding, traffic, and utilities. Another project, Unbundling IS-U, will be implemented in the next step. Egbert Stüber, project director at WSW, says, “To split the data, we first decided to which of the new companies the data was to be assigned. On that foundation, we created distribution rules that were implemented in a migration tool so that distribution could occur. In the best case, it would occur completely automatically.”

The new holding and transportation companies took over specific functions, assets, and personnel from WSW. About 500 employees work at the holding company in administration, IT, invoicing, controlling, purchasing, central services, and shared services. The split into legally independent companies with their own balance sheets occurred on the first weekend in October 2007 and was retroactive to January 1, 2007. All the data for 2007 was converted, and the balances were transferred by period. The conversion worked with objects. Several dozen objects, including the customer, vendor, and material masters along with accounting documents, were split or transferred.

For historical documents, only the open items of vendors, customers, and general ledger accounts and the related balances or partial balances as of December 31, 2006 were transferred. The data transferred from 2006 had to be posted out in a sending company code. The procedure used corresponded exactly to the restructuring.

The transferred assets belonged to company code 0100 until December 31, 2006 and to the new company codes as of January 1, 2007. That approach maintained document flows, links, and a cost view of multiyear, long-lasting projects. Another approach could have transferred all the data so that the new system would look as if it had always been there, but that approach required transferring much more data, converting the archive, and creating summary reports.

Teamwork: creating rules for the split

Wuppertaler Stadtwerke chose CAS AG, of Hamburg as its partner for the conversion. The company specializes in reorganization and data migrations in SAP environments. CAS used its own tool, a system reorganization workbench, during the project.

“The primary requirement of technical realization in this company split was the setup of complex rules that could be used as the foundation for retroactively assigning financial documents to the new company codes with as much automation as possible,” says Jörg Fricke-Kranz, project director and integration consultant at CAS. Stüber adds, “To prepare we had to analyze the existing data and business processes of WSW in detail before the actual data export and import. We also had to remain aware of and maintain integration with other SAP software.”

The actual rules resulted from iterative processing that involved creating and enhancing the rules with tests to determine how much data the rules distributed automatically. “It is not easy to recognize the common attribute of documents to be migrated to a company code,” says Stüber to describe the task. The rules were used to create a split table in SAP software. The table then provided the basis for the actual data conversion. The foundation for making a decision about splitting a document included properties like cost centers, profit centers, document types, and accounts. Priorities defined how to proceed if several criteria applied to a single document.

Data that the rules could not assign was handled manually. This situation applied to only a small percentage of the financial documents and was resolved in a special screen in SAP R/3 from the middle of the year onward. In all other areas, such as controlling, plant maintenance, and materials management, the split ran completely automatically. The rule-based assignments for these areas were clear and could refer to the split tables of accounting. The company decided not to migrate human resources documents; they were cancelled and reposted after the migration.

As though the companies had been there for years

In addition to data migration and splits, the conversion project also involved customizing the new companies and adjusting interfaces and in-house developments. Forms, user authorizations, and software for human resources and business intelligence also had to be adjusted to the new structures.

The split into the new companies began in March 2007. CAS had worked on the project since the evaluation phase in the fall of 2006. Once the split tables were created, CAS migrated data by objects. The objects – such as financial documents or the customer master – were always a summary of various database tables from business perspectives. Almost all the data was transferred by directly inserting it into the database. This procedure is the only option for financial posting documents because they cannot be posted manually. It is also significantly faster than the alternative, batch input, which simulates keyboard entry in screens.

The split project went live right after the first weekend in October 2007. The new companies look like they have been there since the beginning of 2007. Open items and master data look like they were reposted manually on the key date.