From the November 2007 issue of Treasury & Risk magazine

Gold AHA Award Winner in Retirement

Sun Microsystems Inc. was operating with a seriously deficient eight-year-old stock plan system, inadequate Web access tools for the 30,000 participants, and painfully few interfaces with other finance systems. With new Financial Accounting Standards Board (FASB) rules to confront in addition, Sun had no choice but to do a major overhaul of its defined benefit plan--or create a brand new process. "We needed to do something. We needed to do it at once. We needed to do it economically. And we needed to do it right," says Jeffrey Boldt, Sun treasurer and vice president of finance.

That would have been enough of a challenge, but before Sun officials could even begin to strategize about change, they had to convince CFO Michael Lehman, that the expense was a priority at a time when the $14 billion computer networking services provider was tightening its belt in hopes of executing a turnaround. "To get the money, we had to show value from improved accounting and compliance functions," says Boldt. "And we had to promise a good return on investment. It was one of the very few projects that was financed in the past couple of years."

Looking back, Navneet Govil, the assistant treasurer at the time and, since May, controller of microelectronics group, recalls the meticulous decision-making process, involving team members Jean Wong, treasury manager of stock plan services; Aime Shiovitz, project manager; Kathryn Shugart, IT director; Jayesh Parikh, IT manager and the stock plan services staff: Peter Yeav, Laura Fahnlander, Vivian Chui, Susan McGowan, Rosemary Monteith, Audrey Nguyen and Wendy Le.

The first step was to lay out the options. Sun could upgrade the existing system. "But that wasn't viable because the product was being phased out and no enhancements were planned," says Govil. Another possibility: Sun could outsource stock plan administration to a brokerage, while intriguing at first because the work wasn't a core competency, it was ruled out because Sun did not want to lose control of the data.

Only a new system would do; one that would transform Sun's Global Stock Plan Services (GSPS) organization so it could provide superior service to Sun employees, scale up with Sun's growth and create shareholder value. The choice: Equity Edge would be built around a Web-based workflow management system called SPARTA (stock plan administration and reporting tool application) that would fulfill Sun's objectives. It provides a single point of access for all global employees and enhances information quality to them; preserves data integrity; offers back-up and disaster recovery and complies with all regulations, including Sarbanes-Oxley, FAS 123 (new share-based accounting systems) and IRS 423 (regulating tax treatment of employment stock purchase plans (ESPP); and administers Sun's new restricted stock programs. The one-time implementation cost was carefully managed, says Govil, and the model is scalable with low enhancement costs.

Sun executed a "phased and modular implementation process," explains Govil. The first milestone was migration of employee data from the old Transcentive system/database to the Equity Edge system, completed in October 2006. The second was the release, in December 2006, of Web-based self-service tools for employees and stock plan services staff. It also included an automated interface for data exchange with human resources systems. The third milestone was the April 2007 rollout of a second broker, e-Trade, in addition to existing broker Smith Barney. And, finally, a new ESPP tool as well as an automated interface to the payroll system were brought on stream.

Despite a few tweaks as different modules were introduced, the changeover occurred without a major hitch, says Govil. The payback is on course, e-mail and phone inquiries have been reduced about 20% and compliance is 100%.

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