PARIS for Participations & Entertainment Partners for Residuals Outsourcing Green light deck...

PARIS for Participations & Entertainment Partners for Residuals Outsourcing

Green light deck

February XX, 2013

Agenda

►Executive Summary

►Business Problem Statement

►Inception Phase Status Update

►PARIS for Participations - Assessment

►PARIS for Participations - Project Plan

►PARIS for Participations - Financials

►EP for Residuals Outsourcing - Assessment

►EP for Residuals Outsourcing - Project Plan

►EP for Residuals Outsourcing - Financials

►10-year Cost Benefit Analysis

►Project Funding Needs

Draft for discussion2

Executive Summary

• The Participations and Residuals systems are outdated, lack integrations with key enterprise systems and promote many manual, in-efficient and error prone processes increasing the risk of inaccurately paying the Participants and the Talents (Guilds).

• The total estimated cost to convert Participations to NBCU PARIS and outsource Residuals to Entertainment Partners is estimated at approximately $14.9M.


Problem Statement – Participations

● Very manual, time-consuming and inefficient processes are employed for Data Sourcing, Payout Calculations, Paper copying and filing.

● The OPUS system is not enabled to model participant contracts, calculate payouts and to directly generate participant statements. A mix of manual procedures and excel manipulations are employed to prepare Talent Statements.

● The volume and type of products and the complexity of talent deals are ever increasing which results in keeping up with the statement generation schedule very difficult. Additional headcounts are required to keep up with the ever growing volume of work. To deal with the work load, for the deals which are forecasted to not pay do not have statements created (i.e. statements are “bugged”)

● Upstream data sources lacking governance and consistency in usage providing data in a form that lacks the appropriate level of granularity and attributes. Lack of complete understanding of the information flowing into and filtered out of the data feeds into the department.

● Unable to focus on value-add activities (e.g. breakout projections, proactive buyout assessments, ‘What-if’ analysis, impact assessment & feedback to Business Affairs across title, market & media types).


Problem Statement – Residuals

● Very manual, inefficient, and error-prone processes employed for data sourcing, payout calculations, guild reporting, paper copying/filing.

● Majority of the data sourcing and systems feeding is done manually by the clerks which is error-prone. Data reconciliation processes are not rigorous and error prone due to human involvement.

● The volume and type of Products, the complexity of guild rules along with expansion of the reuse markets and the manual departmental procedures results in keeping up with the workload very difficult. This in turn results in un-recoupable overpayments, late fees and penalties on the department.

● The increasing workload and the lack of a system results in the work being handled by the staff through overtimes and by outsourcing to third party providers. This has also resulted in temporary staff being used permanently.

● Unable to focus on value-add activities (e.g. projections, analysis for negotiations and ultimates).

● Recurring errors in payouts and the accompanying claims might strain relations with the Talents.


Part

icip

ati

ons • Difficult to manage the volume with time-consuming manual calculations

• Statement generation is manual and very cumbersome; OPUS does not produce “headsheets” or statements, only the data to support them

• 18-month limit on detailed monthly data in OPUS; difficult to calculate historical point-in-time data• Spends a significant amount of time responding to queries from other groups; lack any type of

estimation/modeling tools for calculating “what-if” scenarios• No system support for payout calculations for the digital markets, and complex talent deals

Audit

• Spends a significant amount of time researching data discrepancies, statement adjustments, etc.

• System “tricks”, dummy numbers, and manual adjustments (“one-sided entries”) pose risks during audits

• Lack of formal checks and balances

IT

• Residuals system is inflexible and has several system limitations (e.g. field sizes are limited to $99,999) as it was implemented in the 1960’s

• IT support for the Residuals mainframe system is very limited due to aging technology. The team has recently lost one-half of the IT support team –resources who had been supporting the department for several years. Additional turnover events (like retirement) will poses serious risks to IT operations and the obsolete technology makes it harder to find suitable replacements.

Resi

duals

• Difficult to manage the volume with time-consuming manual calculations• Changes to the guild agreements cannot be accommodated; system is not equipped to support

current guild agreements• Unable to capture pension or pension ceilings so often overpaying or underpaying• Cannot adjust tax rates as the change will be applied retroactively and recalculate all previous

statements/payments• Payments are manually tracked on a spreadsheet• Retrieve data from 12 different feeds/sources; input data manually from hard copy reports• Electronic reporting to the guilds and talents requires improvement

Current Challenges and Issues by Area


Inception Phase

• An Inception phase was funded with the primary objective of assessing the functional fit-gap of NBCU PARIS against SPE requirements and assessing the feasibility of Residuals BPO.

• Phase Timeline: August 2011 to August 2012 Phase Cost: $949,600

• Phase Scope and Deliverables: Delivered selection of Software Platform and Operations Model using PARIS for Participations Delivered Business Case Assessment and subsequent Due Diligence for BPO with Entertainment

Partners Gathered High Level Requirements through Focus interviews and Workshops with key

stakeholders Finalized Overall Project Scope Developed High-level Project Budget, Schedule and Timeline, Resource Plan (including backfill

requirements) Developed Data Conversion & Migration Strategy and Plan Developed Data Sourcing & Interface Strategy and Plan Developed Greenlighting Material for full project funding

2011 2012

Jul – Sep Oct – Dec Jan – Mar Apr - Jun Jul - Sep

Data & Interface Assessment

Residuals Outsourcing Assessment

NBCU PARIS Impact Assessment

BPO Due Diligence BPO Business Case

PARIS Impact Assessment Report


Comparative Review

ExecutiveDebrief

PARIS for Participations - Impact Assessment

Participations module of NBCU-PARIS has a good level of functional fit relative to SPE’s requirements.

● The Business Process automations delivered by PARIS far exceeds the current automation levels at SPE. ● PARIS capabilities and feature-set for Participations & Audit scored at over 86% and 81% respectively by SPE stakeholders.● PARIS provides a strong coverage for most of the requirements. ● The Participations, Data Staging and Audit modules are quite robust, flexible and more mature than the Residuals module.● PARIS architected on the latest Microsoft technologies including the .NET framework.

NBCU facilitated 4 sessions with SPE:• PARIS overview and orientation • Admin features (Data staging and Administration) demo • Residuals demo • Participations demo

The NBCU demonstrations of PARIS were based on scripted demo scenarios :• These scenarios were based on SPE’s high-level functional requirements.• The scenarios represented a selection of high- and medium priority processing

requirements.• Demos were attended by SPE stakeholders across Participations, Residuals, Input

Consolidation, Audit, Finance and IT groups.


PARIS for Participations - Project Phases

• Impact assessment Requirements Functional fit Estimates

• Hands-on evaluation► Early design► Support model decision► Refined estimates

• Conversion planning► Approach and priorities► Resources and backfill► Controls and

Acceptance► Planning for Parallel

Ops.

• Impact Assessment• Hands-on Evaluation• Conversion planning

• Installation and Configuration• Development and Integration • System & Parallel Testing• Training and Change

management

• Participations Conversion• Parallel Operations• IT Support

• Installation and Configuration► Data loads (migration)► Lookups/mappings► Templates and

hierarchies• Development and Integration

► Interfaces► Reports

• Testing► Functional tests► Parallel tests

• Training and Change management

► Org and process design

• Participations conversion• Parallel operations

► Data refreshes► Porting converted titles

• IT support► Hypercare► Systems maintenance► User support

Draft for discussion

Planning Implementation Conversion

9

PARIS for Participations - Project Timeline

Key Estimation Drivers and Project Considerations

● The PARIS Configuration within the Implementation phase is the key design activity to prepare the system for Participations usage.

● The detail- and research-oriented nature of Conversion makes it the most intensive phase in time and effort. Issues unearthed demand strong decision making skills and Standard Exception Handling procedures need to be instituted.

● Resource planning and Department alignment is critical to the success of the project. Determining backfill, ratio of SPE-to-contractor resources and regular training will help mitigate the risk of PARIS knowledge being confined to contractors.

● There exists a steep learning curve to PARIS, and the departmental functions will become more analytical and less data entry / processing type.

Program management/planning

Hands-on evaluation

Implementation

Hypercare

Participations Conversion

Parallel operations

IT Support

Years

Quarters

1 2 3 4 5

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Go Live

Implementation model decision

Decommission legacy

systems


Planning Conversion

Conversion Complete

10

PARIS for Participations - Project Costs & Benefits Summary


Cost Categories Costs- $ Cost DescriptionPARIS License cost

$3,500,000 Licensing cost for one module

Planning $116,706 Includes initial allocation for planning, management

Implementation $2,539,459 Includes costs for Evaluation, Installation, Configuration, Development, Testing & Go-Live

Conversion $2,550,161 Includes costs for Contract conversion, Parallel Operations

Equipment Costs $411,000 Includes costs for Hardware, App/Web Servers, Storage, SW Licenses

Total $9,117,326 Benefit Categories Benefits - $ Benefits Description $ -

DetailCost Savings $200,000 Savings in Temporary Help Staffing $200,000

Cost Avoidance Avoidance of SCA Hosting Cost $230,535

$523,035 Headcount Avoidance due to Staff Efficiency Improvements

$292,500

Risk Mitigation and Improved Controls

$5,000,000 Prevention of Over Payments (calculated at 0.5% error rate)

$5,000,000

Total $5,723,035

Entertainment Partners selected as the leading vendor from a Business Process Outsourcing RFQ concluded in 2012.

A detailed due diligence assessment of the EP proposal was conducted. The assessment included review of - Organization & Transition approach,

Conversion approach, IT Systems, Timeline and Level of Effort. The goal of the due diligence was to craft the future state organization for SPE and EP,

create the BPO Business Case and confirm the Pricing.

● EP proposes to completely take over certain functions, including product and cast setup, residuals calculations and payment processing.● SPE would retain ownership over interpreting agreements, determining triggers, supporting audits, forecasting and reporting,● Improved Data Staging is the key to Productivity gains. Options include – building in-house, leveraging PARIS, using EP proposed new feeder system (implementation expected in 2013).● There is a potential to offshore 2 FTEs in the retained organization.


EP for Residuals Outsourcing - Assessment

• Finalize Contracts, SLAs, and KPIs

• Define Processes & Controls• Build Data Enrichment

Platform• Build Interfaces for triggers &

payments• Design Organization and

Change Management• Conduct recruitment for

Backfill and retained Organization

• Build the SPE system sunset roadmap

• Implement Organization, Processes & Infrastructure

• Import historic data and recreate balances between SPE & EP

• Business-as-usual interaction between SPE and EP

• Title/cast setups for 1,442 features and 52,714(*) episodes

• Revenue and air date history import

• Reconciliation of historic SPE payments with EP system results

• Document collection for new setups

• Review/approval of setups, triggers and payments

• Audit & forecast support • New acquisitions processing• Residual payment processing• Infrastructure maintenance


Implementation Conversion Operations

13

EP for Residuals Outsourcing - Project Phases

Transition Future State

* = library size as of August 2012

Months

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Signed Contract with

EP

Process Transition

Data Staging / Enrichment

Contract Negotiations

Planning and Administration

EP Client

On-Boardin

g

IT Design & Development Complete

Data Enrichment / Staging Complete

Integration Testing

Complete

Data Conversion

Training

Project Closure

Initial Cutover

Transition Complete

Data Conversion Complete

• Finalize KPI/SLA• Review and finalize

MSA• Finalize new Air

Date vendor

• Finalize transition plan

• Confirm transition team

• Obtain resources

• Confirm Data Enrichment requirements• Configure Data Enrichment requirements• Develop Data Enrichment rules• Test enrichment rules• Deploy enrichment rules to production

IT Design & Development

• Build interface for revenue /run data

• GL interface from EP• Reports development • Reconciliation reports

• Vendor introductions• Account setups• Finalize EP client

profile• User access rights

(hosted environment, VPO)

Integration Testing

• Revenue triggers

• Run triggers• GL feed to SAP

Cutover Plan

• Hosted environment• VPO• Conduct future state process training• EP work shadow and knowledge transfer

• Develop and approve cutover approach (business and IT)

• Decommission transition backfill

• Project completion planning

• Implement retained organization

• Archive historic data• Decommission

conversion backfill• Decommission RP00

• Confirm final process design

• Future process documentation & desktop procedures

Communication

Basic Cable

Game Shows

Pay Cable / Video

Network / Soaps

Fox

Syndications

Other Non Networks

Foreign

Employee

Masters

Features

• Review and finalize communication requirements• Draft communication to internal organization• Draft communication to external organizations (talent, guilds, etc.)

Organizational Transition

• Roles & responsibilities• Identify skillsets for

retained organization• Identify key process

owners• Coordination with HR

(compensation, termination, recruitment)

• Interview potential hires• Identify resource

transition plan and timeline

Data Reconciliation

EP for Residuals Outsourcing - Project Timeline


EP for Residuals Outsourcing - Project Costs & Benefits Summary

Category $ DescriptionPlanning $300,000 Includes initial allocation for

planning, management

Implementation $776,024 Includes costs for Transition

Conversion $1,499,414 Includes costs for Conversion

Equipment Costs $68,000 Includes costs for Hardware, App/Web Servers, Storage, SW Licenses

Severance/Retention

$230,929 Includes costs for

Duplicate Payroll Tax

$306,436 Duplicate Payroll Tax costs

Data Enrichment Platform

$550,000 Includes costs for building Staging & Enrichment platform

Data Reconciliation

$1,209,820 Includes costs for reconciling Revenue & Guild / Talent calculations

Residual SME $780,000 Costs for Residuals Subject Matter Expertise

Total $5,720,623 Category Benefits - $ Description $ - Detail

Recoupments & Reduction in Overpayments

$2,463,079

Reduction in Overpayments 1,138,838Recoupable Overpayments 415,241Over-reported Foreign Remittance taxes 909,000

Cost Savings $656,901

Reduction in Late Fees / Handling Fees 590,910Print Savings 42,296DGA Pension Employee Contributions 23,695

Cost Avoidance $57,634 SCA Mainframes Hosting 57,634

$3,177,614


Summary of Costs & Benefits projected over 10 years


Project Funding Needs Over 10 years

PARIS for Participations

EP for Residuals Outsourcing

Total

Year 1 $6,229,466 $4,355,418 $10,584,884Year 2 $942,839 $1,209,205 $2,152,044Year 3 $864,454 $156,000 $1,020,454Year 4 $864,454 - $864,454Year 5 $216,113 - $216,113Year 6 - - - Year 7 - - - Year 8 - - - Year 9 - - -

Year 10 - - -


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