PS Deal Module Utilization v9.0 Case Study - AEP

LINK 10November 16 – 18, 2010

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PS Deal Module Utilization v9.0 Case Study - AEP

Rick [email protected]

mailto:[email protected]


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– 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

Contents


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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


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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


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Deal Module Scope Overview

Prospectus

Bond Issuance forABC 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


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Deal Module Scope Overview

Calculates the dollar transactions (Cash Flows):

Original $50M Cash Receipt

Monthly Interest Payment $208,333.33

Maturity $50M Repayment

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 $50,000,000LT Debt $50,000,000

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

Visibility to understanding the total debt of ABC.


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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


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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


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Flexibility vs. Complexity

Prospectus

Bond Issuance forABC 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.


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AEP Deal CustomizationsAEP 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


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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


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•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

Request for Improvements with Deal Module


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Questions?Rick Gray AEP Cash [email protected]


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Appendix

PeopleSoft Deal Module Utilization v9.0 Case Study - AEP

Rick Gray AEP Cash [email protected]


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Deal Process and Approval Workflow Summary Page

Appendix A – AEP Custom Deal Approval


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Deal Workflow Setup by Portfolio

Appendix B – AEP Custom Deal Workflow


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Deal Undo Accounting Entries

Appendix C – AEP Custom Undo Accounitng


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Deal Unroll

Appendix D – AEP Custom UnRoll


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Deal Auto-roll

Appendix E – AEP Custom Deal Auto-Roll


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Deal Import Staging Table

Appendix F - AEP Custom Deal Import


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Deal Import Setup

Appendix G –AEP Custom Deal Import

Documents

PS Deal Module Utilization v9.0 Case Study - AEP