Microsoft Dynamics Customer Solution Case Study

Scientific Firm Grows Government Business More Than 100 Percent with Accounting System

Overview “DCAA compliance was a baseline requirement, but it was Country or Region: United States even more important that the system could support the way Industry: Professional services—IT services our business works—that’s why we choose Microsoft

Customer Profile Dynamics SL over a Deltek system.” Based in Monroeville, Pennsylvania, RJ Richard Seitz, Director of Finance, RJ Lee Group Lee Group employs more than 250 people who specialize in solving RJ Lee Group tackles technically challenging problems with a technically challenging problems that team of more than 250 material and forensic scientists, chemists, involve multiple scientific disciplines. physicists, and computer scientists. When the company started Business Situation winning larger contracts with complex reporting requirements, it RJ Lee Group needed a more modern project-accounting system to handle decided to implement Microsoft Dynamics® SL to improve its larger, more complex projects, project accounting. RJ Lee Group used the solution to efficiently including those covered under Defense Contract Audit Agency rules. meet a wide variety of state and federal government-contracting rules, including those subject to Defense Contract Audit Agency Solution The company chose Microsoft audits. As a result, RJ Lee Group has grown its business with the Dynamics® SL over a Deltek system government so dramatically that the company is poised to earn because of its ability to accommodate government-contracting requirements half its revenue from contracts with the U.S. Department of while supporting unique business Defense and the U.S. Department of Energy. In addition, the needs. company reduced administrative workload and increased Benefits visibility into operations so that it can respond to business Growing revenue from government contracts trends as they develop. Excellent audit support Better informed decisions More efficient operations

Situation “To some extent, we were running blind. When Tower Two of the World Trade No one could easily determine how busy Center collapsed on September 11, 2001, a department was or which project they it pushed hazardous airborne debris were billing their time to.” through pedestrian tunnels that connected the tower to the adjacent RJ Lee Group recognized the need for a Deutsche Bank Building. Deutsche Bank modern project-accounting system, not contracted RJ Lee Group to measure the only to handle the Deutsche Bank toxicity and extent of the contamination project, but also to enable RJ Lee Group for insurance purposes. The diversity of to win other large projects with complex specializations required for the task accounting requirements. The company made RJ Lee Group, based in was especially interested in exploring Monroeville, Pennsylvania, the perfect opportunities in growing its business candidate for the job. The company with government agencies. The ideal specializes in difficult technical problems system, therefore, had to comply with having to do with everything from government contractor–accounting rules, materials characterization and forensic such as those issued by the Defense science to analytical instrumentation and Contract Audit Agency (DCAA), and be software development. However, flexible enough to accommodate the although peerless in technical expertise, different types of projects that RJ Lee RJ Lee Group’s financial accounting Group engaged in. system was not up to the task of tracking time and expense for the complex, Solution multimillion-dollar project. RJ Lee Group evaluated several project- accounting systems, including those “At the time, we were still using custom from Deltek and Microsoft. After careful software for financial accounting and job consideration, RJ Lee Group chose costing,” says Richard Seitz, Director of Microsoft Dynamics® SL because of its Finance for RJ Lee Group. “The systems ability to accommodate the company’s were old, hard to adjust, and entirely unique business and accounting inadequate to handle the level of detail requirements. Says Seitz, “DCAA needed for the Deutsche Bank project.” compliance was a baseline requirement, but it was even more important that the To make up for the lack of functionality system could support the way our in its financial accounting system, RJ Lee business works—that’s why we chose Group relied heavily on Microsoft® Office Microsoft Dynamics SL over a Deltek Excel® spreadsheets and often did not system.” know the expenses incurred and time spent on a project until two weeks after Pressed for time, RJ Lee Group set up the company finished a job. Furthermore, Microsoft Dynamics SL with Business the company had no processes in place Portal in five months to help alleviate the to capture the detailed work descriptions project-accounting workload for the that the customer required. Says Seitz, Deutsche Bank project. “We could have

37 been up and running much sooner, but Server®,” says Seitz. “Work orders come the more we saw what the system could in through the laboratory system and do, the more ambitious we became,” automatically get picked up for invoicing says Seitz. in Microsoft Dynamics SL.”

Support for Unique Business Accounting for Government Projects Requirements To make accounting for government In the years since deploying, the projects simpler, RJ Lee Group set up company has upgraded and expanded its Microsoft Dynamics SL to categorize a implementation of Microsoft Dynamics number of specific overhead costs, SL with help from Microsoft Gold general and administrative costs, and Certified Partner SIS. Says Seitz, “Over labor rates. For example, when starting the years, the stability and reliability of work on a government project, RJ Lee the solution has only increased, while the Group bills according to provisional rates flexibility and integration between until the DCAA certifies those contracts. modules remains excellent.” The company creates the provisional rates by using the labor class categories RJ Lee Group added a number of reports in the solution for defined positions, that help department managers and such as project manager, scientist, project managers make better decisions technician, and various administrative faster. Whereas the finance department positions. If the DCAA deems that the previously produced only four static provisional rate needs to be adjusted reports at the end of every month, they after the audited rates are finalized, then now have a wide array of monthly RJ Lee Group can quickly reconcile financial reports and the ability to invoicing done under the provisional produce a myriad of informal reports— rates to the final audited rates. some sent out on a daily basis with updated time and expense data. RJ Lee Group also depends heavily on Employees complete time entry online at the flexibility of Microsoft Dynamics SL the end of each day, specifying which to prepare incurred cost proposals project they worked on and adding any according to Federal Acquisition required notes. Regulations standards—a key requirement for all government RJ Lee Group also connected the contracts. Says Seitz, “Previous to solution with other business systems to deploying the solution, handling help eliminate invoicing paperwork. “We government contracts involved a lot of have a laboratory management system manual work—getting labor rates and called eLIMS that we developed for averages and categorizing what were commercial sales and that we use in our allowable and unallowable costs. Now, own laboratory operations. We were able our workload is much lighter because to link that system together with we’re only handling exceptions. We can Microsoft Dynamics SL easily because be certain that we are following they are both based on Microsoft SQL government regulations because the

47 data is well organized. And, we know By using Microsoft Dynamics SL to that indirect and direct costs are comply with various government project- allocated correctly.” accounting requirements, RJ Lee Group helped grow its government business by RJ Lee Group has just assumed over 100 percent. In 2004, the company responsibility over two laboratories won a multimillion-dollar contract with located in the Hanford Nuclear Site in the U.S. Air Force to develop the Engine Pasco, Washington, as a subcontractor to Health Maintenance Plus Data Mission Support Alliance. This project will Repository Center (EHM+DRC) system. require RJ Lee Group to account for Since then, RJ Lee Group has won approximately U.S.$1 million each month additional software development in revenue according to U.S. Department contracts with the U.S. Department of of Energy project-accounting guidelines Defense worth more than U.S.$28 million and audits. through 2012—work that will help the military greatly reduce the cost of “All government-contracting audits are maintaining jet engines. Because this basically looking for the same project is located in Pennsylvania, RJ Lee information but want it reported in Group must also prepare for different ways,” says Seitz. “They want to Pennsylvania state sales-and-use tax make sure that we are not hiding audits. anything and that we adhere to rules regarding labor rates and taxation and Says Seitz, “Our government work has have accurately described the labor and expanded dramatically since we material expenses related to the contract. implemented Microsoft Dynamics SL and With Microsoft Dynamics SL, we can will very likely account for up to 50 track project costs and adjust our percent of our revenue in the near future. general ledger to accommodate the Before the Hanford project started, it different reporting requirements.” accounted for about 30 percent of our revenue.” Benefits RJ Lee Group now confidently pursues Excellent Audit Support new, larger government contracts With cost structures created in Microsoft because they can easily accommodate Dynamics SL and daily time entry, RJ Lee various accounting requirements with Group is fully prepared to answer any Microsoft Dynamics SL, such as those audit inquiries in a matter of minutes. from the U.S. Departments of Defense Seitz relates an anecdote to illustrate: and Energy. In addition, the company “When we had a DCAA auditor here, he requires fewer administrative resources asked to see how timesheet data and can make more informed decisions progressed from the point of entry to based on timely and detailed project where it hit the general ledger. He pulled reports. up a chair and settled in, as though he Growing Revenue from expected to be there a while. He selected Government Contracts an existing timecard that included work

57 performed on one of our government More Efficient Operations projects. We tracked the document RJ Lee Group is able to do much more number of the timecard, a unique with its resources in the financial identifier for that timecard, through all department, while other departments the modules in Microsoft Dynamics SL. I have reallocated their resources toward then showed him where it showed up on efforts that add more value to the the general ledger and on the project company. “Our corporate accounting account—all in about a minute! He was team is much more efficient, but we’re impressed and said he’d never seen still busy because our project and anything like it. This could not have been department managers are asking more done in our old system.” of us,” explains Seitz. “On the other hand, the departmental groups have been able Better-Informed Decisions to realize significant savings in their As RJ Lee Group won projects of greater administration costs due to the improved size and complexity, the solution helped availability of information. We estimate the company keep up with detailed that we’ve saved between one-half to a information going to company and full administrative position in many of departmental managers as well as our departments.” customers. Says Seitz, “We can meet virtually any reporting requirement with Microsoft Dynamics SL. This capability helps us avoid billing disputes with our customers, but more importantly, it gives our managers the information they need to keep us at peak operational efficiency and profitability.”

Company managers can now view month-end financial reports in a little more than a week after the end of the month compared to between three and four weeks before implementing Microsoft Dynamics SL. This up-to-date view of the entire company’s performance helps management identify and respond to emerging trends. Says Seitz, “In 2005, we experienced a slow period across our business and were able to position ourselves accordingly. If we were still running on our old systems, we wouldn’t have seen that coming until a month or two afterwards.”

67 Microsoft Dynamics Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like familiar Microsoft software such as Microsoft Office, which means less of a learning curve for your people, so they can get up and running quickly and focus on what’s most important. And because it is from Microsoft, it easily works with the systems that your company already has implemented. By automating and streamlining financial, customer relationship, and supply chain processes, Microsoft Dynamics brings together people, processes, and technologies, increasing the productivity and effectiveness of your business, and helping you drive business success.

For more information about Microsoft Dynamics, go to: www.microsoft.com/dynamics

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