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Enron Mail |
Here it is. The block in the middle summarizes the change in business
situation over the last two years. Stephen ---------------------- Forwarded by Stephen P Schwarz/HOU/ECT on 02/23/2000 02:34 PM --------------------------- Enron North America Corp. From: Stephen P Schwarz 02/18/2000 04:17 PM To: Bryce Baxter/HOU/ECT@ECT, Lisa Csikos/HOU/ECT@ECT, Rita Wynne/HOU/ECT@ECT, Mechelle Stevens/HOU/ECT@ECT, Susan Harrison/HOU/ECT@ECT, Brenda F Herod/HOU/ECT@ECT, Brent A Price/HOU/ECT@ECT, Melissa K Ratnala/HOU/ECT@ECT, Leslie Reeves@CCMAIL, Evelyn Aucoin/HOU/ECT@ECT, Laura E Scott/CAL/ECT@ECT, Cheryl Dawes/CAL/ECT@ECT cc: Melissa White/HOU/ECT@ECT, Dorothy Ricketts/HOU/ECT@ECT, Kimberly Perkins/HOU/ECT@ECT, Trang Le/HOU/ECT@ECT, Christy Sweeney/HOU/ECT@ECT Subject: Unify AR -- SAP Plans Two years ago Enron North America made a decision to use Unify AR for cash application rather than SAP AR. We decided at the time that SAP AR would be kept in sync with Unify AR by the Unify/SAP interface. We believe that the business logic for that decision has changed, and are now recommending that Unify AR be permanently turned off and all AR functions be performed in SAP. I have briefly summarized the change in business situation below. Two Years Ago Today Netting allowed by legal and credit ONLY if netting contract was already in place. Netting encouraged by legal and credit wherever possible, regardless of existence of signed agreement. Netting limited to one counterparty and legal entity at a time. Canada nets across counterparties. Netting performed in physical only, financial settlements to maintain separate net statement process. ENA considering netting physical and financial together. All account coordinators were to apply their own cash. Cash applied centrally in Power, Financial and Canada Individual coordinators apply cash only in physical Gas. Cash was to be applied at the line item level to track variances and to facilitate calculation of cost of funds by commercial team. Cash is not being applied meaningfully at the line item level. The company has not made any move towards calculating cost of funds by commercial team. The Account Inquiry functionality in Unify was thought to be a key on-line tool. Old habits die hard...most users appear to be printing reports and reviewing data, rather than using the on-line functionality. Overapplication of cash was not to be allowed. Overpayments would be classified as "on account", with issues tracked in a case management system. Case management system does not exist. Allowing overapplication helps the account coordinators track overpayments easier than leaving cash on account. The counterparty/legal entity combination on the deposit needed to match the counterparty/legal entity combination on the Enron invoice. Given the number of legal entities Enron has, along with the number of entities our counterparties have, this seems like a hopeless battle. Allowing cross-application of cash seems easier. Corp required that intercompany settlements had to be "settled" with cash movement. Corp no longer requires intercompany settlements to be "settled" with cash movement. Converting to SAP AR simplifies the Unify/SAP interface in the following ways: Bank deposits into SAP do not have to be split off into Unify Cash entries in Unify do not have to be interfaced back to SAP Unify netting entries do not have to be interfaced to SAP Payables information does not have to be interfaced from SAP to Unify Given the change in attitudes towards our netting business process we face two problems in Unify. Controls built into Unify are already obsolete. Unify does not maintain all products in one database, making efforts to net across products in the future (physical with financial, for instance) impossible. Our understanding of the netting process in SAP indicates that there are no controls (which sounds good at this point) and that we would retain the automatic netting entries when the payable is netted with the receivable within SAP. However, we emphasize that netting would be done in SAP, not at the time of finaling a payment in Unify. To repeat, we are recommending that Unify AR be turned off and we convert to SAP AR. We will schedule a meeting the week of February 22 to discuss. Please call me at X33179 with any questions or comments. We WILL make this decision by February 28 because the SAP timeline does not allow any additional time for consideration. Stephen
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