SYSTEMS ENGINEERING APPLIED TO
CORPORATE RESTRUCTURING
SEDC 2014, SoS-8
Richard Chipman
Technical Lead, Surveillance & Reconnaissance Group
Leidos, Inc., Reston, Virginia
Outline
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Background
Objective
The Corporation as a SoS
Application of SE to Restructuring
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Requirements and Concept Development
Analysis and Preliminary Design
Detailed Design
Development / Implementation
Integration and Verification
Validation
Go-Live/Transition
Conclusions and Lessons Learned
©2013 LEIDOS. ALL RIGHTS RESERVED.
Background
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2012: Science Application International Corporation (SAIC)
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Science, engineering, and technology applications company
$11 billion of annual revenue
38,000 employees
Customers in national security, energy and the environment, critical
infrastructure, and health
Problem
− Potential conflicts of interest between various SAIC business segments,
limited business opportunities that could be pursued >> Limit on growth
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Corporate Business Decision
− Split the company into two independent corporations
• Solutions-focused business
• Services-focused business
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Project Gemini
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BlueCo
Solutions focus
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WhiteCo
Services focus
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Leidos
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SAIC
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Challenge
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Restructuring of this magnitude historically took > 18 months
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Prolonged process >> turmoil and uncertainty >> impacts to stock
price and customer confidence
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Inadequate planning & faulty execution >> business decline after the
restructuring
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Solution enacted by COO >> Application of SE
− Core competency of legacy company >> practice what you preach
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Objective
− Split legacy company into two separate publically-traded corporations
− Plan and execute the split within a single year
− Assure both corporations are fully functional on “Day One”
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Composition of a Modern Corporation
Operational Components
 Aka, Line Organizations
 Produce products &
service sold to customer
Corporation
Operational
Components
• Develop
• Produce
• Deliver
• Products & Services
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Functional
Components
• Provide & care for resources
• Address financial & legal needs
• Manage corporate health
• Provide vision & strategy
Functional Components
 Aka, Functions
 HR, Finance, Legal, etc.
 Administer the overall
corporation
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The Corporation as a System of Systems
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Large corporations have
multiple loosely coupled
Line segments and many
largely autonomous
Segment
D
Functions
Each is a system of its
own, operating within the
parent corporation
Finance
Contracts
Corp
HQ
IT
Segment
A
Segment
C
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HR
Segment
B
Each Organization as a System
Controls
• External Constraints (e.g. laws)
• Controls from other functions
• Policies
Inputs
Interfaces to:
Function
• Structure
• Processes
• External systems
• Internal systems
Interfaces to:
• External systems
• Internal systems
Mechanisms
• Personnel & roles
• IT systems
• Equipment
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Outputs
©2013 LEIDOS. ALL RIGHTS RESERVED.
Application of SE to Restructuring
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One-Year Goal Time Line
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Requirements and Concept Development
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Senior corporate management developed a succinct set of top level
requirements based on business objectives
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Project Gemini team and senior leadership developed CONOPS
document describing how each company would operate after split
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Gemini sub-teams analyzed and decomposed the top-level
requirements to derive detailed requirements, an organizational
architecture, and a mapping of each requirement into that
architecture using SE-defined template
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Total number ~ 5,000 requirements for the two companies
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SE team captured those requirements in DOORS®
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Sample of HR Requirements Mapped to
Organization Level in SE Template
Corp Org Levels
Function
Reqt #
Human Resources 1
Human Resources 1.1
Human Resources 1.1.1
Human Resources 1.1.2
Human Resources 1.1.3
Human Resources 1.1.3.1
Human Resources 1.1.3.2
Human Resources 1.1.3.3
Human Resources 1.1.4
Human Resources 1.1.5
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Statement of Requirement
HR Sub-Function
The company shall have a human resources function
providing services for the hiring, retention, compensation
and administration of all personnel.
All
Talent management and OD sub-function shall 6.1 Develop
and manage human resources (HR) planning, policies, and
strategies (10409)
Talent Management and OD
Talent management and OD sub-function shall 6.1.2.4
Develop succession plan (10426)
Talent Management and OD
Talent management and OD sub-function shall manage
Communications
Talent Management and OD
Shared Service Center sub-function shall manage
Orientation attendance (NEO)
Shared Service Center
Shared Service Center sub-function shall manage
Orientation and Support
Shared Service Center
Shared Service Center sub-function shall manage
Orienation - New Hire Paperwork
Shared Service Center
Shared Service Center sub-function shall manage New
Hire Database Sharepoint® Access
Shared Service Center
Talent management and OD sub-function shall manage
M&A Activities
Talent Management and OD
Talent management and OD sub-function shall manage
Compliance Related activities
Talent Management and OD
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L1
L2
MT
MT
MT
U
U
U
U
C
MT
L3
L4
Sample of Requirements Captured in DOORS®
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Preliminary Design of Both Companies and
Their Components
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Organizational structure to align with market needs
Key corporate processes and policies
For each Function and Line org
− Internal org, policies and processes
− Interfaces to other internal & external orgs
− External and internal constraints
− Staff size, roles, responsibilities, authority
− Key IT systems and equipment
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Used SE templates to guide & document
SE developed RTM & used DOORS® to analyze traceability
− Verified all requirements were allocated
− Verified each org component had been allocated at least one requirement
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Preliminary Design Review (PDR)
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Covered BlueCo and WhiteCo designs
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PDR Contents
− Organizational structure & CONOPS
− Changes to processes and policies
− Roles, responsibilities and authority
− Major changes to each Function with benefits, cost impacts, potential
negatives, and risks
− Cost savings projections
− Risks
− Initial implementation schedule
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Detailed Design
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Detailed organization structures and with full headcount by level
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Job descriptions for top positions (line and function)
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Indirect costs for each function to meet affordability envelopes
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Key changes required for policies
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Process maps for processes changing due to the reorganization
− Used model format most familiar to each organization
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Descriptions of Service Level Agreements (SLAs) between
Functions and both companies
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Detailed Integrated Mater Schedule (IMS) up through separation
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Completion gate: Critical Design Review (CDR)
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Example of Process Map (Swim Lane Model)
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Example of Process Map (IDEF0 Model)
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Organization Design Captured in DOORS®
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Captured each design artifact in DOORS
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Process Design Captured in DOORS®
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Traceability Report: Requirements to Design
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SE analyzed traceability of each requirement to the design
©2013 LEIDOS. ALL RIGHTS RESERVED.
Development / Implementation
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Personnel
− Reassignment, retraining, staff reductions and some additional hires
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Operational policies
− Develop and promulgate modified /new corporate & functional policies
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Operational processes
− Create, test, refine, document, train, communicate
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Legacy information
− Determine BlueCo/WhiteCo custody and access rights
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Transactional tasks
− Multi-functional tasks related to legal aspects of separation
− Example: SEC Form 10 required input from all functions and senior mgmt
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IT Systems
− Clone and configure applications and data
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Separation Agreements
Interface Control Documents between BlueCo & WhiteCo
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Agreement on allocation of customer contracts to each company
Transition Service Agreement (TSA)
− Service that functions in one company supplies to the other company
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Distribution Agreement
− Division of real estate, facilities, equipment, IP
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Tax Matters Agreement,
− Responsibilities and liabilities of each company
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Employee Matters Agreement,
− Employee equity, incentive and compensation plans, benefits, etc.
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IP Licensing Agreement,
− Licenses granted to one company for IP retained by the other
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Preservation of Records
− Legacy information
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IT Systems: Major Challenge
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Identify systems, data sets, and computer HW needed by each
company
Modify & test interfaces with external IT systems
Duplicate/divide/mask data for PPI and business concerns
− Systems that use data relating to employees, contracts & organizations
need correct subsets of existing data applicable to the specific company.
− Example: Computation of revenue from existing contracts
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Restricting employee access to the systems and data of the other
company
Mechanics and phasing of the cutover from a single set of IT systems
to two differentiated sets
©2013 LEIDOS. ALL RIGHTS RESERVED.
332 IT Systems Provided by Internal and
External Sources
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Every Function, including the
Line, had multiple businesscritical IT systems
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Provided / hosted by Corp
ITS, external vendors and
internal Line organizations
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Majority had interfaces to
other systems
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All had business sensitive
data
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Complexity of Migrating IT Systems
Install cloned applications and
databases
 Reconnect each application with
its own databases
 Reconnect each application to
other databases
 Re-establish interfaces between
applications
 Convert data to BlueCo or
WhiteCo only
 Modify applications for BlueCo or
WhiteCo business logic
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Integration and Verification
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Applies to both IT and non-IT organizational systems
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Non-IT example:
− Process for obtaining, recoding and updating contract-related information
pertaining to a contract involved multiple Functions & Line components
− Impacted by changes to components’ structures and processes
− Altered processes had to be integrated & verified across organizations
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I&V of changes to IT systems required Functions’ participation
− Some dependencies between systems arose from the content and
semantics of data passed between the systems – unknown to ITS
− SE team helped uncover such instances, and plan the necessary I&V
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I&V Activities
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Developed integration plans and procedures for human processes,
as well as IT systems
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Developed test plans for verifying the integrated systems
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Performed system tests addressing dependencies and integration
issues
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Performed preliminary and final end-to-end tests of the integrated
systems
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Challenges of Validation
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Multiple aspects needed validation
− Systems function as intended
− Systems must use data & processes appropriate to each new company
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Must run legacy systems up to cut-over
− Could not validate most systems completely until cutover was in process
− Could not complete validate for some systems until after cutover
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External systems interfacing with ours
− Driven by their own business constraints
− Impossible for us to dictate schedule & details of their validation activities
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Pre-Cutover Validation Activities
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Planning
− Test scenarios for each of the Function’s processes and integrated
scenarios for processes that interacted with one another
− Pass/fail criteria based on their business considerations
− Order and sequence of integration, data refreshes, and validation testing
for each process or set of integrated processes
− Cutover plans defining validation testing and Go-Live decision point
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Testing
− Human simulations of changed processes not involving IT systems
− IT test using cloned systems in “sandboxes“ including vendor-hosted
systems, where possible
− End-to-end tests of sets of systems integrated in the sandboxes
− TCR of both ITS’ and Functions’ results
− Remediation plan for each issue encountered
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Tracking Pre-Cutover Activities
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©2013 LEIDOS. ALL RIGHTS RESERVED.
Transition and Go-Live
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Many changes transitioned before cutover, such as
− Organization of Line components >> 8 months before
− Personnel & organization of Functions >> 6 months before
− Many non-IT Functional processes >> 5 months before (Soft Split)
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Other pre-cutover activities:
− Dress rehearsal
− Readiness Review
− Sequenced communications with entire workforce of each company
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IT ”go-live” did not occur on a single day to allow for
− System interdependencies
− Data refreshes
− Final system validation
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Success
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Official split and corporate go-live within 13 months (one more than
goal; but five less than normal)
Final validation of non-critical IT systems in weeks following
corporate go-live
©2013 LEIDOS. ALL RIGHTS RESERVED.
Conclusions and Lessons Learned
Critical success factors
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Commitment of senior leadership and strong Project Gemini program management
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Willingness of Functions to learn and apply SE
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SE Team working daily alongside the Functions and Line Org implementation teams
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Incremental application of SE process matched to project phases
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Constant communication within Gemini team
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Thoroughness of requirements analysis
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Ability of SE to anticipate & identify integration points between systems, be they
human or IT
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Multiple levels and iterations of testing
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Extensive cutover planning, scripting, and rehearsal
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©2013 LEIDOS. ALL RIGHTS RESERVED.
Other Lessons Learned
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Learn each other’s technical language
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Ask the same question multiple times, to multiple people, in multiple ways
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Corporate Functions do not plan and schedule to the level of detail common in SE
− Important to work with them to get the granularity appropriate to the project
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Deadline elasticity during Functions’ normal operational times can cloud forecasts
− Routine process changes normally can take much longer than predicted without
noticeable impact on a Function’s ability to perform work
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Develop trust among the team
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Great challenges provide motivation and enthusiasm necessary to work through
issues as a team to produce a joint win
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©2013 LEIDOS. ALL RIGHTS RESERVED.
Acknowledgements
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Systems Engineering was used on Project Gemini because of the
vision of Stu Shea, the Leidos COO
SE was successful because of
− Leadership of Charles Kanewske, (Leidos, Senior Vice President and
Director for Enterprise Risk Assessment & Execution), Douglas Wagoner
(SAIC, Services & Solutions Sector President)
− Efforts of the System Engineering Team headed by Chief Engineer
Stephen Fine.
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Other members of the System Engineering Team
− The author, Patrick Kennedy, Eric Bott, Jesse Aronson, and Steven Baur
©2013 LEIDOS. ALL RIGHTS RESERVED.