Finance & Administration Committee Action Item III-A May ... · FY 2010 Metro Matters - Information Technology UCN (CE_ITUP) $5,000,000 $21,046,484 ... - Execute project based on

Finance & Administration Committee

Action Item III-A

May 13, 2010

Financial Systems Integration

TITLE:

Financial Systems Integration Project

PURPOSE:

To obtain Board approval to initiate and award, under GSA or through competitive procurements, contracts to implement the Financial Systems Integration Project for better integration and optimization of current applications, subject to the Board`s annual approval of the operating and capital budget and the receipt of the funds.

DESCRIPTION:

WMATA implemented PeopleSoft`s Enterprise Systems (Financial and Human Resource) in 2005 expecting to have fully integrated, cost-effective business systems that provide timely and accurate information in a centralized, usable format; eliminating unnecessary manual touch points and incorporating best business practices. That goal was not fully realized. Although the system overall is functional it requires manual intervention and data corrections to ensure data integrity and the current processes do not line up with best business practices to allow the efficiencies supported by an enterprise system. This lengthens the time it takes to perform transactions including procurement, payable, revenue and receivable as well as project management and reporting and analytical activities. Since 2005 Metro has undertaken a series of projects to update the necessary hardware, infrastructure and system change management processes to support this enterprise system. In February 2010 an assessment of the Financial system components was completed. The findings in this first phase were that the system itself is functional but in need of upgrade and overall re-integration and re-architecture of certain modules for optimal system performance. An assessment of the Human Resource Components is currently underway and scheduled for completion in September 2010. This request relates to the implementation of the assessment recommendations for the financial components. It will allow Metro to perform the upgrade and the re-integration and re-build required to optimize the financial applications of this enterprise system. This will also allow Metro to correct control weaknesses identified in its single audit reports that relate to the manual intervention required as a result of the lack of integration and of certain modules in the current system configuration. FUNDING IMPACT:

Washington Metropolitan Area Transit Authority

Board Action/Information Summary

Action InformationMEAD Number:

100641

Resolution: Yes No

RECOMMENDATION:

To approve the initiation and award, under GSA or through competitive procurements, contracts to implement the Financial Systems Integration Project for better integration and optimization of current applications, subject to the Board`s annual approval of the operating and capital budget and the receipt of funds.

Action for Multi-Year Funded Contract Capital Improvement Program

Financial Systems Integration

Budget:

ARRA- Financial Systems Integration (CL_FNSY)

FY 2010 Metro Matters -Information Technology

UCN (CE_ITUP) $5,000,000 $21,046,484

This Action: $4,743,200 $4,256,800

Prior Approval:$256,800 $13,394,469

Remaining Budget:

0 $3,395,215

Remarks:

Additional funding for this project is included in the proposed FY2011 capital program. The budget and funding beyond FY2010 are subject to approval by the Board

Operating BudgetImpact:

Positions: The goal is that although there will be some realignment there should not be an increaseAnnual Expense: This process should streamline processes including procurement, payment and receivable processes.

Fi i l S t I t tiFinancial Systems Integration Project (FSI)

Finance and Administration Committee

May 13 2010May 13, 2010

PurposePurpose

Approval to:• Initiate and award contracts to implement the p

Financial Systems Integration project for better integration and optimization of current applications.

Enterprise Systems BackgroundEnterprise Systems - Background

2010 Need: Upgrade and better integration for2010 Need: Upgrade and better integration for optimal system performance

Approach to Integrating Financial SystemsApproach to Integrating Financial Systems

Assess Current State – Completed Finance, Starting HR – Focus On Business Process TechnologyBusiness Process, Technology, Operations

2010 ‐2011

Plan/Organize – Build Internal Metro Team, Select Integration Partner, Engage All Parties

Execute Change – Upgrade And I t t S t U d t /St th

2011 –2012

Integrate Systems , Update/Strengthen Policies, Train Workforce On New Business Processes

2010 PeopleSoft Suite Current Modules

Financials Human Capital

2010 PeopleSoft Suite – Current Modules

Financials Human Capital

Financial Management

A G l A

Payroll

Time & Payroll CompensationAccounts Receivable

GeneralLedger

Accounts Payable

Cash Management

CommitmentControl Billing

Labor Payroll p& Benefits

Human Resources

Fixed Assets Procurement Strategic

Sourcing

Supply Change ManagementRecruitment Training Labor

Relations

PerformanceManagement

AbsenceManagement

WorkforceAdministration

Contracts Project Costing

Management Management

Customer RelationshipEnterprise Performance

Budget Analytics Data Warehouse

CustomerService

ContactCenter

Current Future

Financial Systems - 2010 Assessment Findingsy g

T h i l C bilitiTechnical Capabilities• Hardware, infrastructure, change management procedures are

adequateDi t d d d t ti d i t• Disaster recovery procedures and documentation needs improvement

Automation • Budgets, cash management, procure-to-pay processes are manually

intensive due to complexity

Data Value and Data Integrity• System inefficiencies cause manual intervention and data corrections in

budgets, cash management, general ledger and grants management

Integration• Lack of integration and comparison to best business practices highlightLack of integration and comparison to best business practices highlight

a need to improve finance operational processes

Operational Challenges and RemedyOperational Challenges and Remedy

Challenge Remedy• Constant reorganization • Plan reorganizations to maintain consistent

processes, reporting and information standards

Challenge Remedy

• Focus on technical management and solutions

• Focus on business process and functional use of PeopleSoft solution

• Severe issues with data value

• Complex budgeting and cost

• Establish data standards at source of transaction

• Decentralize capital cost tracking at• Complex budgeting and cost tracking process

• Significant workflow and data i

• Decentralize capital cost tracking at operational units enforcing accountability

• Establish clear roles and responsibilities for t d i t t l f tiissues

• Highly manual, inconsistent Procurement and payables process

procurement and inventory control functions

• Simplify capital request and approval (MEAD) process and automate manual p y pinteractions between inventory and accounting systems

Enterprise Solutions Group OrganizationEnterprise Solutions Group - Organization

Key Requirements for Success:

- Consistent executive leadership- Cross-functional participation from Finance, HR, IT and

Operations departmentsp p- Execute project based on IT governance methodology and IG

recommended standards- Dedicated project team augmented with skilled contracted

resources

Considerations in Selection of ImplementerConsiderations in Selection of Implementer

• Speed of implementationUnless the implementer is in place by June 2010, there is a high risk that the project rollout will be delayed into FY2013 prolonging closure ofthe project rollout will be delayed into FY2013, prolonging closure of existing audit issues

• Contractor track record of success in PeopleSoft re-architectureContractor track record of success in PeopleSoft re architecture projects Seek references from other government entities in similar states of crisis

• Knowledge of Metro culture and challenges

• Fixed price, milestone-based contract structure p ,

FundingFunding

• Funding requirement in FY2011 for FSI project to meet the July 1, 2012 implementation date is $12 million – Includes $4.7 million of ARRA funding– $3 0 million is for the Metro staffed project organization– $3.0 million is for the Metro staffed project organization– $9.0 million is for outside contracts

RecommendationRecommendation

Approval to:• Initiate and award contracts to implement the p

Financial Systems Integration project for better integration and optimization of current applications.

APPENDIX

Glossary of TermsGlossary of Terms

ERP Systems (Enterprise Resource Planning) - a way to integrate data andERP Systems (Enterprise Resource Planning) a way to integrate data and processes of an organization into one single system. Most ERP systems use a common database to store data for various functions found throughout the organization

Stand-Alone Application- a computer system that is operational, is not connected to any other system and functions independently

System Integrator - a person or company that specializes in bringing together variousSystem Integrator a person or company that specializes in bringing together various subsystems into a whole and ensuring that those subsystems function together as one

COTS Product - commercial, off the shelf, ready-made software

Business Process - a collection of related, structured activities that produce a specific service or product (serve a particular goal) for particular customers. It often can be visualized with a flowchart as a sequence of activities.visualized with a flowchart as a sequence of activities.

PS-Maximo Integration - the flow of data between Metro’s accounting, procurementand inventory management system

Glossary of Terms (cont )Glossary of Terms (cont.)

Procure to Pay - the process of obtaining and managing all raw materials needed for running Operations. This cycle starts with the source selection, followed by procurement of goods and services. Demand for items are converted to procurement requirements through purchase orders and confirmation of goods receipt. The incoming materials are then inspected and posted into inventory as part of managing the warehouse. The last activity in this cycle is payment of the suppliers which consists of receiving entering and checking vendor's invoice for correctnessconsists of receiving, entering and checking vendor s invoice for correctness.

z Future State of Financial Systemsz Future State of Financial Systems

Area Current Issues Desired StateArea Current Issues Desired State

General Ledger - Fixed Assets

On out-dated mainframe, no integration with any other system

Becomes part of enterprise financial system, retire mainframeother system mainframe

General Ledger -Allocations

High volume and complex Streamlined process, spread across organization

General Ledger- Monthly closing

Compensate for poor data quality with highly manual, labor intensive process

Integrates with revenue systems, labor cost and receipts; improve datalabor intensive process receipts; improve data quality with control accounts

Position Budgeting Budgeting is performed at Integrates with HR positionPosition Budgeting Budgeting is performed at FTE rather than by positions

Integrates with HR position management to properlyreflect budgeted positions and retire the exchange of PCN process

z Future State of Financial Systems (cont )z Future State of Financial Systems (cont.)

Area Current Issues Desired StateGrants management Managed by spreadsheets

and manual, ad-hoc process

End-to-end grants management by implementing four unused modules of current financial system

Capital projects Reliant of General Ledger f f ll j t t

Capture and report on all cost b i l ti th j tfor full project cost; no

easy way to calculate work-in-progress

by implementing the project costing portion of the system properly

Accounts payable Every process requires Best practice methodsAccounts payable, Accounts receivable, cash, revenue

Every process requires manual intervention and multiple corrections

Best practice methods understood and implemented; workforce uses systems accurately

Purchasing integration with Inventory system

Interface issues cause errors in both systems

Clear ownership established for all source transactions and automation corrected in the

h i tpurchasing system

Financial Systems Road mapFinancial Systems - Road map

• Assessment complete (Feb 2010)

• Pre-upgrade tasks to mitigate risk (Mar 2010 – Dec 2010)pg g ( )

• Create business architecture maps (June 2010)

• Database and PeopleTools upgrade (May 2010)

• Formation of Enterprise Solutions project team (June 2010 Milestone)

• Re-architecture effort begins (June 2010 to July 1, 2011 Milestone)

• Stabilization and support period (July 2011 to June 2012)• Stabilization and support period (July 2011 to June 2012)

• Milestone – Project completion and ability to make ROI-based decisions