By Randy Egger
President, Project Partners LLC
Former chief architect of Oracle E-Business Suite Projects applications
Over 20 years ago, Finance and IT organizations (under the direction of the Chief Financial Officer), were in control of systems and desperately wanted to instill some financial controls and measures into the Delivery organizations that ran projects. The battle was always that the Project Managers (PMs) didn’t want to be controlled by departments they felt had no understanding of the world of project management, they wanted complete flexibility to best deliver their projects, and they were not concerned with the CFO’s desire for visibility into projects. Most PMs managed projects using personal systems based on Microsoft® Excel or Microsoft Access. The more sophisticated project managers used Microsoft Project, and the most advanced firms used Primavera, Cascade, Mantix, Artemis, and Cobra. BUT, the project systems used by PMs seldom could reflect accurate cost data which then made it difficult to really know the financial health of the project. Therefore, many PMs simply managed to effort and schedule.
In the “old days” a job code equating to a project was part of the general ledger chart of accounts – and most PMs were not strongly concerned about financials. So, how could you let accountants manage financials and project managers manage projects? You needed a system that allows both worlds to obtain the information that they wanted in the format that they wanted. To meet this need, in the early 1990’s Oracle released its first Project Accounting (PA) system: a true project based sub-ledger.
When the initial implementations of PA started, it was the Finance group that was imposing controls onto the Project Managers. Finance wanted visibility into ongoing projects, hence Finance was making most of the decisions, which generated friction between the organizations. To meet the requirements driven by Finance, PMs needed to change the way they were managing projects and that introduced a large opportunity for Change Management.
Getting structure into a non-structured environment was the primary challenge. When companies have been doing things a certain way for decades, it is VERY hard to change that culture… so compromises are made in an attempt to balance the needs of both organizations. Some folks would create a Work Breakdown Structure (WBS) to map to a Cost Structure simply so that they could track and control costs. Other companies placed intelligence into both the Project number as well as the WBS … because that was the way it was always done in the past. Some would claim that it made controlling charges easier while others would claim that it made reporting easier. But, in both cases, Project/Task naming was mirroring the way a General Ledger chart of accounts is structured, and not the way a project manager manages a project.
As time progressed, operations and project-based delivery organizations matured and developed a better understanding of what is needed to facilitate harmony between Finance and Project based Operations. At the same time, Oracle developed a Project Management system that was closely linked to its Project Accounting application. When Oracle released its Oracle Project Management (PJT) application and companies began to implement it, it became clear that Oracle had taken one step closer to really bridging the Accounting world to the Project Management world. But that still was not enough. PMs wanted and needed an EASY tool to assist them with their Project Management needs. Then, Oracle made the smart decision to purchase Primavera.
For those companies that implemented Oracle Project Costing and Project Billing only, without a futuristic vision of having a truly integrated Project Management system in place, trying to implement any form of integration of Project Accounting to a Project Management system became a horrible mess. When that happens, the only real thing that can be done is to update the implementation of Project Costing and Project Billing with a clear understanding of how it would integrate with either Oracle Project Management or Primavera. If there are other major issues that also need to be addressed, then a complete reimplementation of these modules should be considered.
Any company that is upgrading to E-Business Suite Release 12, or implementing R12 for the first time, will have the opportunity to rethink or redefine how they will move to become a truly project centric organization. Whether you are implementing for the first time, updating your implementation or re-implementing, thinking through the business needs that address both Project Accounting and Project Management will be paramount for your future long term success.
This issue applies to more firms than one might initially expect. I have always stated that “every company is a project company … they just don’t know it yet.” As more and more organizations decide to operate their firm or certain divisions on a project basis to better understand costs and level of effort and to develop repeatable processes using a structured Project Management methodology they will look to Oracle’s Enterprise Project Portfolio Management solutions, which remain the most complete in the market. And they will benefit from the significant evolution of these applications that enable Finance and Project Management to work together in harmony.
