Finance Modernization Project

[Audio] Hi everyone, thanks for your time watching our presentation for BADM750 Semester Team Project. We are going to present our analysis on Finance Modernization Project happening at MGM Resorts International. Our group members are Andrew McCurdy, Jesse Ford, Joseph Perry, Liv Moore, and Vivian Pan..

[Audio] MGM Resorts International is a global entertainment company focusing on resorts, hotels and casinos. MGM owns 32 hotels globally, many of which are located on the iconic Las Vegas strip. The company aims to be the "world's premier gaming entertainment company" by providing "anticipation, entertainment and unparalleled experiences".

[Audio] The issue at hand is MGM's current system: Infinium AS400 Financial Management. This is an accounting software that includes General Ledger, Payables Ledger, Accounts Receivable, Fixed Assets, and Project Accounting modules. There are some drawbacks to the software that impact its efficiency. First, the customizing capabilities are limited. Users from various corporate departments and hotels have reported having limited options for customizing the software to their specific needs. Second, it's not compatible with other software. For instance, hotel revenues recorded in various subsystems would not integrate to Infinium. Third, Infinium's mobile support is restricted. In general, issues arise due to inadequate process, technology constraints, or lack of formal data ownership. Of the available options, Oracle's Enterprise Resource Planning (ERP) System provides the most potential success in replacing the currently utilized Infinium AS400 Financial Management software and to improve efficiency overall. Given Oracle's excellence in the field, as stated by Gartner, the ERP system is built to service "upper-midmarket and Tier 1 organizations" with an extremely customizable global solution. Due to the cloud implementation, putting Oracle's ERP system into service will be up to 50% less than implementing an onsite ERP system. Not only does this represent a lower cost but also reduced maintenance and increased accessibility to important data. This package includes access to robust Business Intelligence features to help automate manual practices and procedures in the accounting process. Each of these features represent an opportunity for the strategic and tactical objectives of this project to be met..

[Audio] To effectively alleviate the issues at hand, the new system will need to improve efficiency and productivity for internal employees. Further, the system should reduce the amount of time employees spend on the system due to outdated software. Ideally, the new business software will increase growth across all markets. This is a strategic benchmark. On a more tactical note, the improvements will positively impact the transparency of financial data for employees across the company. Overall, the new system and process will allow the company to scale operations, provide more flexibility and automate processes that are currently done manually. Oracle's ERP System poses the most potential to meet these strategic and tactical objectives..

[Audio] MGM currently uses Infinium AS400 Financial Management. It is an accounting software that includes General Ledger, Payables Ledger, Accounts Receivable, Fixed Assets, and Project Accounting modules. AS400 was introduced by IBM in 1988, and it has since grown popular in the hospitality business, with MGM adopting it around 1998..

[Audio] Similar to other businesses, MGM's financial system will load and analyze data from two primary sources: revenues and expenses. Revenues from hotel activities consist of room reservations, food and beverage sales, leisure services, table games, and slot machine earnings. Other revenue sources include sponsorship, MGM Rewards incentive fees, outlet rental fees, and retail sales. Revenue transactions are recorded in the various subsystems and data will be transferred to Infinium. Expenses such as rent, property taxes, and insurance will be processed as payable entries directly in Infinium, while variable expenses such as compensation, utilities, and project expenditures will be recorded via journal entries and uploaded to Blackline or Timberline. Once these financial transactions are imported into Infinium, data will be consolidated and posted to each of the hotel's respective profit-and-loss (P&L) accounts. After the input data is entered into Infinium, the system processes the information to update the appropriate accounts and ledgers. This processing involves the calculation of account balances, posting of transactions to various accounts, and the creation of accounting entries to reflect the financial transactions. Output data consists of financial reports, including balance sheets, income statements, trial balances, and cash flow statements, as well as other accounting and financial management reports. These reports cannot be customized in Infinium, and users must export them to the Cognos Finance reporting system if they wish to modify any report to meet specific needs..

[Audio] Infinium generates a variety of prebuilt reports, as shown in Figure 1. However, users are unable to modify any of these reports. As a result, data must be imported into Cognos Finance (a web-based financial reporting and analysis software that provides a range of financial management and reporting capabilities) to generate custom reports to meet user needs. Additionally, Infinium cannot drill down into transaction details. Users could only view whether a transaction is an invoice or a journal entry. Figure 2 shows the trial balance screen in Infinium..

[Audio] The current system faces two main problems. Firstly, the existing system lacks quality control when receiving file transfers from third-party external applications. The system constraints drive data quality issues due to only being able to receive data in flat file format, sent one way through the firewall. Missing or duplicate file loads create issues, such as accidentally triggering the server to resend all historical data previously sent, causing a system 'back-up' that takes up to three weeks to resolve. This root cause of the problem is the lack of process and ownership to reconcile and check data transfer of flat files, no exception report when a file fails to load or is duplicated, lack of a file load status log, and system alerts. The hypothesis suggests establishing a formal process with data quality rules to prevent loading duplicate data and establishing a data quality report that measures data quality standards. A possible solution is to establish a data quality framework with established rules and KPIs to monitor the completeness and accuracy of data and provide exception-based reports and dashboards to users that can provide status on data consistency, accuracy, and completeness. Figure 6 illustrates the data quality issue in Infinium..

[Audio] The second issue is hotel properties' reliance on Excel to communicate information with Corporate, and often time results in the posting of journal entry adjustments. For instance, in order to create allocations, properties must submit their data as Excel files, which creates a dependency in terms of timeliness, accuracy, and versioning. The time required to collect, verify, and create the information for a manual journal entry has the greatest impact. After receiving each Excel file, the allocations are generated manually to create the journal entry, which is then uploaded from Blackline to Infinium. Additionally, the procedure is prone to errors, which must be corrected and adjusted at the month-end close of the following month. Manual processes and excessive reliance on Excel spreadsheets are the primary cause of the error-prone overhead. One hypothesis is the lack of a formal process and system to manage allocations and journal entry posting from the hotel level to the general ledger. One possible solution is to consider new technological solutions and revise business processes. Ensure data integrity mechanisms such as DQ and profiling between source and target systems if source systems plan to remain..

[Audio] The current financial transaction and reporting system is inefficient, manual, and prone to human error, resulting in data inaccuracies and delays. Communication between teams is lacking, resulting in duplicate functions and increased workload. The IT team lacks established SLAs and mapping technologies, leading to manual workarounds and decreased data quality. These challenges, along with insufficient systems, disjointed processes, and blurred accountability, contribute to a recurring theme of "data is bad." A new system is needed to improve the financial transaction and reporting processes and address these problems..

[Audio] Now, we will discuss the future system intended for MGM. This proposed system will be constructed and offered by Oracle, a leading cloud-service provider..

[Audio] The intended system design will include the necessary hardware and software to drive a streamlined and fully integrated operation. The data that will flow in and out of the ERP will allow for each of the financial systems at MGM to "talk" to one another without interruption and fully in the cloud, not on the work premises. This will ensure a few things: data will be accessible and visible to many users; the data will be the single source of truth; and real-time viewing will be possible to ensure there are not duplicates of information or outstanding issues that go unresolved..

[Audio] The new enterprise data hub will host various tools and functions that will allow finance users to take control of their data and see real-time changes. A few fey features to this system could include but are not limited to analytics, receipt accounting, billing, payables, general accounting, and procurement. The central data hub will act as the "brain" of the ERP and be able to flexibly change data into different data types and categorize it as needed for database access and control. A clean data environment will ensure accurate reporting and reduced manual tracking of projects..

[Audio] The new system will have a few key requirements that are similar to other enterprise resource planning launches. Integration of tools, consolidation of data, and reporting are a few of the outcomes desired. The intended framework will include servers with sufficient processing power, memory, and storage capacity. There will also be network infrastructure that can handle the expected traffic. Finally, the client devices will need to meet the minimum for accessing the system. The software requirements include some of the following: operating system supported by the ERP, database software, web server software, and browser software. All of these functions are standard pieces to an ERP, but when they are all included and managed by the IT department, they become a cohesive unit backed by security and reliability..

[Audio] As seen in the diagram on this slide, there is a flow of data from one end to the other. On the left most side, there exists the multiple data sources that will use APIs to interact with the data registration layer. From here data will move into the processing zone and be distributed among various outlets depending on the type. At this stage data will be pulled into targeted workflows to allow for seamless integration. Data can be imported via CSV files as well. When a user needs to request access to specific data, Oracle will push data through in this manner to provide the user with the requested information..

[Audio] Here is an example of what a full cloud services architecture could look like at MGM. There will ultimately be three separate layers that allow for easy maneuvering of the data through the system. The first layer is the integration layer, and it will allow the data to be extracted, transformed, and loaded. This layer is key to providing a data-driven system where all information is inside that system at all times. APIs get pushed from this layer to the next one. The next layer is the application layer, and it involves giving the user the ability to access various financial software that help in portraying the data from the previous layer. The bottom layer is the reporting layer, and it is responsible for full data extraction and form generation. The user can simply print reports that can moved outside of the system, if needed..

[Audio] The financial cloud is Oracle's cloud offer that includes many tools and functions for anyone working in the finance department of any company. A few key items include general ledger, accounts receivable, and accounts payable. All of these different department will have varying access to this cloud at any time on any approved device..

[Audio] The procurement cloud provides the department responsible for securing raw material with tools for making their jobs easier. Purchasing and sourcing, for example, have tools like creating purchase orders, managing negotiations, dispatching purchase orders, or approving awards and contracts. These tools are essential in business operations. Other tools in the procurement cloud include external functions like the supplier portal, which allows supplier of the company to manage their own information securely inside of their customer's website. This sort of interaction makes it easier for purchasers and suppliers to interact with each other much more easily and safely..

[Audio] The project portfolio management cloud is a modern project execution tool for project managers. Some features of this cloud include financial management, budgets, forecasting, project planning, and managing contracts. These tools are essential for any business once projects are awarded to contractors. Many companies need project management applications to stay on target and meet deadlines..

[Audio] Without diving too deep into the landscape of the typical system since we have already covered much of it at this point, we can see that there are so many moving parts that must interact with each other. The entire diagram shows how deeply connected all of the basic components must be for successful operation. Many of the services are simply data storage of employees' information and not even necessarily work data from the actual business..

[Audio] This image shows how MGM's intended design will incorporate many different software tools ranging from various revenue systems to Workday for people data to Oracle's Cloud ERP for accounting and expense management. All of these different systems work together behind the scenes to ensure business operations run smoothly..

[Audio] We will now review the project timeline, budget, and constraints..

[Audio] We will now be discussing the 5 phase timeline for the ERP System Implementation. Phase 1 is Planning, last from Q3 to Q4 2022. In this phase, the team will Develop a project charter that outlines the scope, objectives, and deliverables of the project. Identify project goals and objectives, which will guide the project team throughout the implementation. Develop a project plan that includes the project schedule, milestones, and key deliverables. Develop a budget for the project that accounts for all project costs, including personnel, technology, and infrastructure. Define the implementation team, including key stakeholders, project managers, and technical experts. Phase 2 is Design, starting in Q1 2023. This phase will cover: Gather requirements from stakeholders and end-users to ensure that the ERP system meets business needs. Develop a design for the ERP system that aligns with the organization's strategic goals. Configure the system to meet the organization's specific requirements. Develop test scripts to ensure that the system functions as intended. Conduct user acceptance testing to ensure that the system meets end-user requirements. Phase 3 is Build & Test, from Q2 to Q3 2023. In this phase, the team will: Build the ERP system according to the design specifications. Integrate the system with other systems and applications as necessary. Conduct performance testing to ensure that the system meets performance requirements. Conduct user acceptance testing to ensure that the system functions as intended. In Phase 4 Deployment, which will happen in Q4 2023 to Q1 2024, the project team will: Migrate data from existing systems to the new ERP system. Provide end-user training to ensure that users are familiar with the new system. Go live with the new ERP system and monitor its performance and functionality. Provide ongoing support to end-users and address any issues or concerns that arise. Conduct a post-implementation review to evaluate the success of the implementation and identify areas for improvement. In last Phase 5 for Maintenance & Support, which is estimated to happen in Q2 2024, the company will: Provide ongoing maintenance and support for the ERP system, including system upgrades and patches. Monitor the system's performance and address any issues or concerns that arise. Provide user support and training as needed. Ensure that the system continues to meet the organization's business needs and strategic objectives. In conclusion, the successful implementation of an ERP system requires careful planning, design, testing, and deployment. By following this five-phase project approach, MGM can ensure that the implementation is delivered on time, within budget, and meets their strategic objectives..

[Audio] Based on other ERP project implementations with more than 200,000 users we were able to develop a total budget of $90 million. With over 200,000 users this equates to roughly $450/user. This budget is a preliminary budget, and the details and exact scope would need to be descoped by the appropriate Executive personnel at MGM to ensure that all of the project goals and constraints have been captured in the proposed budget. Based on the 5-phase project implementation that we covered at length on the previous slide, upon completion of each phase time period the designated percentage of the total project cost will be billable..

[Audio] There are many constraints that MGM should consider some of which include: (1) compatibility constraints. Project team needs to ensure the ERP system is compatible with existing technology infrastructure, hardware, and software applications. (2) Data quality. The team needs to evaluate the quality and completeness of data and develop a data management strategy to ensure accuracy, security, and accessibility. And (3) regulatory constraints, which is to ensure that the ERP system complies with relevant regulatory requirements and data privacy laws. As for Risks, MGM may face implementation delays, cost overruns, disruption to business operations, data loss or corruption, lack of end-user adoption, security breaches, and inadequate testing during the implementation process. MGM should develop a comprehensive implementation plan that addresses constraints and risks, identifies mitigation strategies, and establishes contingency plans to ensure a successful implementation that meets business needs and goals..

[Audio] From everything we have talked about, we have an implementation plan to make sure our systems are updated, and all have the new Oracle ERP system installed and ready to fully use by the third quarter of 2024 and scheduled to go live with Oracle on July 6th, 2024..

[Audio] To help employees understand Oracle better, MGM is putting together this change plan to help them get to know their new ERP a little more. MGM will offer Go Live support which is basically a support page and support team for reporting resources, virtual training, toolkits, packages, more office hours for help, video training, and individual sessions. To help with the training, there will be multiple ways of getting delivered to meet the needs of all employees. MGM will offer live training as well as training within Oracle. Oracle is known to have more than 250 guides that will help you understand the new ERP system if the live training isn't enough. There will also be support periods to help with support as well. Hypercare support will only be provided for the first couple of weeks, and this is for fast access to the support team if you need something answered within minutes. Within the Hypercare support, all you would need to do is just join a Microsoft Teams chat room and someone from the project team will help. Finally, MGM will also offer any training materials and resources needed to help the implementation of the new Oracle ERP system..

[Audio] 4 weeks prior to the new Oracle ERP system conversion of master data begins from all of the employees. We should only expect this to be finished when Oracle is live as this is just converting the old data to the new data, so it works together. Then, with 3 weeks prior to the new Oracle ERP system, employees will experience blackout periods, and this will continue until Oracle is fully live. MGM is also going to offer ongoing training and information to make this transition as smooth as possible. Finally on July 6th, 2024, all of our data should fully be converted, and people can run the new Oracle ERP system and resume to normal work schedule with no more blackouts..

[Audio] To help with the integration method for everything inbound, we are going to transfer data from the source, apply the rules, create files in target state, and make sure the automation of file movement/encryption is working. Once the files from the source are loaded into the external SFTP location, the Invoke Cloud ERP services will load the files to a Universal Content Management and run load and import jobs to help create transactions Middleware which is required to execute file-handling steps..

[Audio] Then, to help with the integration method for everything outbound, first the Oracle financials cloud will make sure to publish the files to an external SFTP server. After doing this, they will transform the data, apply the certain rules, and work on the automation of file movement/encryption to help move the files to their certain target system..

Project Summary.

[Audio] This presentation outlines an execution plan to address the critical risks associated with an obsolete financial system (Infinium) and its inadequate data environment. The identified risks include the incapacity to grow with the company, an increase in financial control risks, labor-intensive and non-scalable operations, a lack of financial information insight, and lack of competitive advantage. To address these risks, the proposed solution includes repairing the data environment to allow for scalability to a higher purpose, implementing a fully-integrated and modern Enterprise Resource Planning (ERP) solution, transforming processes and the operating model, and creating more automated and self-service information access. The proposed solution Oracle ERP offers a number of benefits, including risk reduction and mitigation through automation, standardization, and control environment enhancement. The technology used will be scalable through the ERP Enterprise Data Hub and Business Intelligence, enabling the potential elimination of multiple point solutions. Accurate and timely business insights will be achieved through the use of real-time dashboards and drillable financial data. In conclusion, the implementation of the Oracle ERP application coupled with the Business Intelligence technology will create a centralized platform of integrating information and managing operational processes. The proposed solution provides a comprehensive strategy for addressing the identified critical risks and enabling the company to scale and maintain its market competitiveness..