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How American AG Taught its Data To Give Them Answers

PORTLAND, OR, Apr. 7, 2008 -- David Elstrom had a problem. American Ag's VP of Accounting Systems and Internal Controls couldn't get the information he needed when he needed it. "We were saddled with an investment accounting system that didn't help us manage our investments," he recalls. "It wasn't really an accounting system. It was something that just generated reports. We had a legacy system and we needed to change it to accommodate what we needed and to be more flexible in reporting and accounting issues especially in today's environment."

"David's complaints weren't that unusual," says Kaj Pedersen, Chief Operating Officer, Pendo Systems, Inc. "Older systems just can't handle the reports the c-suite is demanding. Most legacy platforms are not able to deliver the benefits that today's investment departments need. Reporting to meet current stringent regulatory needs is difficult. In addition, these systems were never designed to deal with the multi-currency issues that many investment departments face today." Pendo formed an alliance with ICC, Inc. to install American Ag's new accounting system and do the conversion from the old one.

It was the multi-currency issue that sent Dave over the edge. "I needed original currency data for our branch in Canada to meet Canadian regulations," he recalls. "The only way I could do it with my old system was to clone the database and then tell the clone of the data base that the functional currency was Canadian instead of US Dollars. That said it all. We were always struggling to make the old system work in the desired reporting environment. This was one of many workarounds and I was tired of workarounds. I said to myself, 'We need a proper investment accounting system. One that gives us information history, foreign currency and compliance data the way we need it.'"

Elstrom is typical of the executives who get to the end of their rope with unworkable legacy systems. Many, though, are still reluctant to bring in a new system. "There is usually a fair amount of emotion associated with decisions like this and sometimes executives simply don't do it because they don't want to face the hassle of converting to another system," observes Pamela Pecs Cytron, Chief Executive Officer of Pendo Systems. "Together with ICC, we have devised a method by which the conversion process is streamlined and efficient. By adhering to strict disciplines and a cohesive process, clients no longer need to fear the conversion process. The BasisPoint product provides significant advantages and a measurable return on investment relative to the time and work involved in the conversion process. With American Ag, Dave told us that the conversion to a new system and the benefits BasisPoint would provide, ultimately outweighed the many necessary workarounds and the status quo of using the old system."

A good part of that reluctance to change is that a conversion is always more complicated than the company anticipates in-house. "When you convert from one investment system to another, it is not simply a conversion of the existing data. The new system probably has many new features and data elements, which is why you are upgrading," points out Doug Sheehan, whose company, ICC inc. partnered with Pendo at American Ag to implement their Basis Point(R) accounting software. "As a result, it is usually necessary to augment the old data with new data elements and do a substantial amount of data cleanup. The new system also presents many opportunities for process re-engineering. The staff needs to be trained on new work flows and procedures. The bottom line is that this process is much more than simply converting data."

Elstrom readily admits that he worried about the effort needed to put in the new system and what it would contribute to his daily workload. He didn't want the conversion to eat up all his time. "That's a common concern and one we do our best to overcome," says Pedersen. "Clients still have their day-to-day jobs to do when a conversion is taking place. It's important that the conversion isn't a distraction from their daily activity. We want to minimize the pain for the client during this process."

Dave was pleasantly surprised at how little the conversion disrupted his day-to-day workload. "It really was easier than I expected," he says. "I like the fact that my effort was marginal in all of this. Pendo and ICC together were a well-oiled machine. The team, led by Pendo Systems' Teri Henry and ICC's Doug Sheehan, brought a great deal of experience in programming and data processing talent. They had a systematic approach to making this happen. They were the project leaders and we were the partners. They took control of my project plan and we mutually set timetables and deliverables. I believe proper planning is 90 percent of the heavy lifting. All in all, it was an easy conversion, which was a pleasant surprise."

"This process was so successful because it was a hands-off process for the client," says Pecs Cytron. "Their involvement was minimal. That meant no disruption to the organization."

"We pride ourselves in having a development methodology that allows us to manage projects well," adds Pedersen. "It allows us to define the scope, success criteria and visibility needed to keep the client informed at all stages of the project. There were points of clear ownership of the success of the project on the client's part. The success was a combination of the project approach Pendo was able to bring, plus ICC's conversion process and ability to clean American Ag's data. We involved the client when necessary and all of us were stakeholders in the project's success."

Scrubbing, which is essentially verifying the data, is an important part of the conversion that many overlook. "Data scrubbing is the first step we take in any conversion. Data quality governs everything. Data scrubbing accomplishes this," points out ICC's Doug Sheehan. "We cleaned the data for American Ag because they had an old system with data that wasn't dependable. It might pick up the settlement date and sometimes that could be the trade date, for example. So they never knew what they were getting. By doing the data scrubbing first we actually improved the data before doing the conversion. As a result, we improved the quality of the whole accounting system and expedited the conversion process."

Elstrom confirms the value of this first step. "Since the conversion I'm not confused about what I'm getting when I ask for data. We knew the original data had problems. The data scrubbing was a value-added benefit. It was a bonus just because of the efficiency of the conversion process. Pendo and ICC make a good team. The two together helped ensure a successful project. The caliber of the people they brought to the deal made the difference. Together, their planning and organization ensured that everyone accomplished their jobs. This was one of the best run projects we've had the experience of working with."

What can others learn from American Ag's conversion? Pedersen offers these pieces of advice: "Make sure your management team understands what's expected from them during the conversion process. Be specific in telling your conversion consultants how you will measure success. Make it clear between both parties what critical issues will require their involvement. Also, make sure you specify what decisions the clients will need to make during the conversion process and what the conversion team will do. Most importantly, make sure everyone is clear about what's important for the success for the project."

The cooperative effort was a first for Pendo and ICC and both companies also see the American Ag as a success. "We searched for a year for an implementation partner that had the track record, tools and experience to make conversions painless from the clients' point of view," sums up Pecs Cytron. "We're pleased that the client felt it was painless. As a result of the success of the American Ag conversion, we've moved the conversion process into the forefront of our competitive advantages. It confirmed that, together with ICC, Pendo Systems could do it better than other companies and with less wear and tear on the client."

About ICC

Investment Conversion and Consulting, Inc. (R) (ICC) helps institutional investors implement investment management back-office solutions. ICC has been called the financial industry's "merger veterans", having created and put into play many of the best practices used today in investment accounting systems integrations. Since 1993, they have integrated the investment systems in some of the most high profile mergers in the industry. The firm also offers systems' consulting services support for the investment accounting and operations functions of major insurance companies and other institutional investors. They provide business analysis, technical analysis, software solution recommendation, vendor selection, and improved processes for management and operations. The firm's proprietary software tool, IRDB(R), enhances management and operations related reports for clients. For more information see www.iccinc.com.

About Pendo Systems

Pendo Systems, Inc. is a premier provider of software solutions for global financial institutions. The firm was founded in 2006 to launch a comprehensive solution for the problems that arise with aging legacy-based accounting systems in the financial services sector.

Pendo Systems' core product, BasisPoint(R), is a global enterprise-grade investment accounting engine is rapidly becoming the new standard in Investment accounting system delivery. BasisPoint runs on the Microsoft technology platform including Windows 2003 Server and Microsoft SQL Server 2005 systems. Pendo Systems has offices in Montclair, New Jersey and Bellevue, Washington. For more information

visit www.pendosystems.com.

Media Contact

Andrea Obston (860) 243-1447 (office), (860) 803-1155 (cell),

(860) 653-2712 (home) aobston@aomc.com