SYSTEMS ENGINEERING APPLIED TO CORPORATE RESTRUCTURING SEDC 2014

SYSTEMS ENGINEERING APPLIED TO CORPORATE RESTRUCTURING SEDC 2014, So. S-8 Richard Chipman Technical Lead, Surveillance & Reconnaissance Group Leidos, Inc. , Reston, Virginia

Outline Background Objective The Corporation as a So. S Application of SE to Restructuring − − − 2 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 2012: Science Application International Corporation (SAIC) − − 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 Corporate Business Decision − Split the company into two independent corporations • Solutions-focused business • Services-focused business 3 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Project Gemini Blue. Co Solutions focus White. Co Services focus Leidos SAIC 4 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Challenge Restructuring of this magnitude historically took > 18 months Prolonged process >> turmoil and uncertainty >> impacts to stock price and customer confidence Inadequate planning & faulty execution >> business decline after the restructuring Solution enacted by COO >> Application of SE − Core competency of legacy company >> practice what you preach 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” 5 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Composition of a Modern Corporation Operational Components Aka, Line Organizations Produce products & service sold to customer Corporation Operational Components • Develop • Produce • Deliver • Products & Services 6 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 © 2013 LEIDOS. ALL RIGHTS RESERVED.

The Corporation as a System of Systems 7 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 © 2013 LEIDOS. ALL RIGHTS RESERVED. 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 8 Outputs © 2013 LEIDOS. ALL RIGHTS RESERVED.

Application of SE to Restructuring 9 © 2013 LEIDOS. ALL RIGHTS RESERVED.

One-Year Goal Time Line 10 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Requirements and Concept Development Senior corporate management developed a succinct set of top level requirements based on business objectives Project Gemini team and senior leadership developed CONOPS document describing how each company would operate after split 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 Total number ~ 5, 000 requirements for the two companies SE team captured those requirements in DOORS® 11 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Sample of HR Requirements Mapped to Organization Level in SE Template Corp Org Levels Function Reqt # Human Resources 1. 1. 2 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 12 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 sub-function shall manage Orientation and Support Shared Service Center sub-function shall manage Orienation - New Hire Paperwork 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 © 2013 LEIDOS. ALL RIGHTS RESERVED. L 1 L 2 L 3 L 4 MT MT U U C MT

Sample of Requirements Captured in DOORS® 13 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Preliminary Design of Both Companies and Their Components 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 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 14 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Preliminary Design Review (PDR) Covered Blue. Co and White. Co designs 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 15 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Detailed Design Detailed organization structures and with full headcount by level Job descriptions for top positions (line and function) Indirect costs for each function to meet affordability envelopes Key changes required for policies Process maps for processes changing due to the reorganization − Used model format most familiar to each organization Descriptions of Service Level Agreements (SLAs) between Functions and both companies Detailed Integrated Mater Schedule (IMS) up through separation Completion gate: Critical Design Review (CDR) 16 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Example of Process Map (Swim Lane Model) 17 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Example of Process Map (IDEF 0 Model) 18 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Organization Design Captured in DOORS® 19 Captured each design artifact in DOORS © 2013 LEIDOS. ALL RIGHTS RESERVED.

Process Design Captured in DOORS® 20 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Traceability Report: Requirements to Design 21 SE analyzed traceability of each requirement to the design © 2013 LEIDOS. ALL RIGHTS RESERVED.

Development / Implementation Personnel − Reassignment, retraining, staff reductions and some additional hires Operational policies − Develop and promulgate modified /new corporate & functional policies Operational processes − Create, test, refine, document, train, communicate Legacy information − Determine Blue. Co/White. Co custody and access rights Transactional tasks − Multi-functional tasks related to legal aspects of separation − Example: SEC Form 10 required input from all functions and senior mgmt IT Systems − Clone and configure applications and data 22 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Separation Agreements Interface Control Documents between Blue. Co & White. Co Agreement on allocation of customer contracts to each company Transition Service Agreement (TSA) − Service that functions in one company supplies to the other company Distribution Agreement − Division of real estate, facilities, equipment, IP Tax Matters Agreement, − Responsibilities and liabilities of each company Employee Matters Agreement, − Employee equity, incentive and compensation plans, benefits, etc. IP Licensing Agreement, − Licenses granted to one company for IP retained by the other Preservation of Records − Legacy information 23 © 2013 LEIDOS. ALL RIGHTS RESERVED.

IT Systems: Major Challenge 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 24 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 Every Function, including the Line, had multiple business-critical IT systems Provided / hosted by Corp ITS, external vendors and internal Line organizations Majority had interfaces to other systems All had business sensitive data 25 © 2013 LEIDOS. ALL RIGHTS RESERVED.

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 Blue. Co or White. Co only Modify applications for Blue. Co or White. Co business logic 26 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Integration and Verification Applies to both IT and non-IT organizational systems 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 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 27 © 2013 LEIDOS. ALL RIGHTS RESERVED.

I&V Activities Developed integration plans and procedures for human processes, as well as IT systems Developed test plans for verifying the integrated systems Performed system tests addressing dependencies and integration issues Performed preliminary and final end-to-end tests of the integrated systems 28 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Challenges of Validation Multiple aspects needed validation − Systems function as intended − Systems must use data & processes appropriate to each new company 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 External systems interfacing with ours − Driven by their own business constraints − Impossible for us to dictate schedule & details of their validation activities 29 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Pre-Cutover Validation Activities 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 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 30 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Tracking Pre-Cutover Activities 31 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Transition and Go-Live 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) Other pre-cutover activities: − Dress rehearsal − Readiness Review − Sequenced communications with entire workforce of each company IT ”go-live” did not occur on a single day to allow for − System interdependencies − Data refreshes − Final system validation 32 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Success 33 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 Commitment of senior leadership and strong Project Gemini program management Willingness of Functions to learn and apply SE SE Team working daily alongside the Functions and Line Org implementation teams Incremental application of SE process matched to project phases Constant communication within Gemini team Thoroughness of requirements analysis Ability of SE to anticipate & identify integration points between systems, be they human or IT Multiple levels and iterations of testing 34 Extensive cutover planning, scripting, and rehearsal © 2013 LEIDOS. ALL RIGHTS RESERVED.

Other Lessons Learned Learn each other’s technical language Ask the same question multiple times, to multiple people, in multiple ways 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 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 Develop trust among the team Great challenges provide motivation and enthusiasm necessary to 35 © 2013 LEIDOS. ALL RIGHTS RESERVED.

Acknowledgements 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. Other members of the System Engineering Team − The author, Patrick Kennedy, Eric Bott, Jesse Aronson, and Steven Baur © 2013 LEIDOS. ALL RIGHTS RESERVED.