Maximizing the benefits from your ERP – before and after implementation NASACT August, 2009.

Maximizing the benefits from your ERP – before and after implementation

NASACT

August, 2009

Copyright © 2009 Deloitte Development LLC. All rights reserved.2

Finance Transformation is a Long Journey

• State governments cumulatively spend hundreds of millions of dollars annually on ERP planning, acquisition, implementation, and maintenance

• Maximizing the benefits of your ERP requires:– Inter- and intra- agency collaboration

– Strong executive sponsorship and participation

– Recognition that all benefits cannot be realized on Day 1

• Each state has its own nuances, but there are enough similarities that we can learn from each other. Two states are currently pursuing a path to maximize benefits from their ERP:

– State of New York – pursuing a first in the nation approach to coupling financial systems through a Service Oriented Architecture (SOA)

– Commonwealth of Pennsylvania – demonstrating that “after implementation” business process analysis further increases benefits

State of New York Approach to Integrated Financial Management between SeparateConstitutional Entities

NASACTAugust, 2009


• How to best streamline interdependent business processes between separate constitutional entities?

– The Case for Financial Systems Integration

• Decision Process Towards Integration

• Solution Overview and Related Challenges

Discussion Points

The Case For System IntegrationJoan SullivanExecutive Deputy Comptroller for OperationsNew York State Office of the State Comptroller


State of New York is implementing two instances of PeopleSoft “loosely coupled” via SOA “middleware”

• Elected State Comptroller– Responsible for audit of payments and contracts, statewide accounting and

financial reporting

• Elected Governor– Responsible for business operations within executive agencies

• Joint Governance established to coordinate new financial systems

State of New York Organizational Context

Several states have separately elected officials with check and balance responsibilities that make a single ERP very challenging.

Several states have separately elected officials with check and balance responsibilities that make a single ERP very challenging.


State of New York Government Organization

Executive Branch

New York State Government

Judicial Branch

Legislative Branch

State Attorney General

State Comptroller

Governor

LT. Governor

Departmentof Law

Departmentof Audit and

Control

State Agencies(in the following

functional areas):

•Economic Development

•Education

•Parks/Environment

•Health and Social Welfare

•General Government

•Transportation

•Mental Health

•Public Protection

All four officials are separatelyelected on a statewide ballot


Statewide Financial Systems Governance

Executives from the State Comptroller, Division of the Budget, and Office for Technology comprise the Joint Governance Board (JGB)

Joint Governance Board (JGB) Legislature

Joint Coordinating Committee (JCC)

Domain OwnersBudget/Finance

ProcurementHuman Resources

Accounting

Domain OwnersIT Domain

NYFMS Steering

Committee

QualityAssurance (QA)

NYFMS Project Director

PMO

FOCAS Project Director

PMO

NYFMSProject Team

Joint Project Team(s)

FOCAS Project Team

FOCAS Steering

Committee

Business/Design Decisions

IT Architecture/ Design Decisions

Operating Decisions

Operating Decisions

Op

erat

ing

Dec

isio

ns

Joint ProjectTeam Lead(s)


History of the New York State Financial Systems Program

Statewide Financial Systems Program Evolution

Pre-2007 2007 2008 20091999-2005• Initial efforts/

assessments/ planning (business case, stakeholder assessment, strategy discussions) toward replacement of OSC’s Central Accounting System (CAS)

2005-2006• Quality Assurance

Consultant (KPMG) selected for OSC Project

• Oracle’s PeopleSoft Financials software chosen for OSC project

• Deloitte assists with Executive Agencies’ system requirements definition for NYFMS

• OSC and DOB announce intention to create a strategic partnership to coordinate implementation of statewide financial system

• Deloitte joins FOCAS Project Team as Integrator/Developer

• OSC implementation project begins December 2007

• NYFMS selects PeopleSoft Financials software

• Joint Governance Board requests integration analysis from Deloitte Consulting and KPMG and selects option that best balances risks and rewards

• Integration approach and 4/1/2011 go-live date announced

• MOU governing statewide financial systems program approved

• Teams begin joint work on COA and SOA designs

• NYFMS Project awards System Integrator contract to IBM

• Joint efforts toward integrated statewide financial system continue…

Decision Process Towards Near Real-time IntegrationTerry BlakePrincipalDeloitte Consulting


Option 1: Batch file transfer Two Systems, Minimally Integrated Approach• Separate transaction and master data• Batch file transaction transmission between OSC and Executive Agencies

Option 2: Two Systems, One Maintains Master • Separate systems; separate transaction data; some common master data• Batch file transaction transmission between OSC and Executive Agencies

Option 3 – Two Systems, Common Master, Near Real-Time Transaction Synchronization• Separate systems; separate transaction data; some common master data• Near-real-time transaction transmission between OSC and Executive Agencies

Option 4 – Single System Logically Separated as Two• Single systems logically partitioned; separate transaction data; some common master data• Near-real-time transaction transmission between OSC and Executive Agencies

Option 5: Single System Application• Single systems; common transaction data; common master data• Common real-time transactions between OSC and Executive Agencies

Considered 5 Options for Integration (from 2008)

Integration Continuum

Integration OptionsLow Integration --- High Integration

1 2 3 4 5

Business Process Integration

Data Integration

Core Data

Master Data

Transaction Data

Low Medium High


Assessment of Integration Options (from 2008)

Cross OSC and Executive Agencies

workflow transformation

Today - This was probably underestimated – should have

been at least a half ball:

Integration Assessment CategoriesIntegration Options

1 2 3 4 5

Benefits – Business and IT

Degree of Difficulty – Technology difficulty, organization change requirements, funding and governance requirements

Cost – Design and Build

Cost – Operate and Support

Risks – Related to governance, reputational damage, delays, conflicting needs and priorities, and security


Summary of Integration Options (from 2008)

Option 1 Option 2 Option 3 Option 4 Option 5

Pro

s

No interference with OSC development and timetable

Maximum physical separation of application and data with simple security

Key common master data across systems

Separation of application and most data requires simple security setup

Minimal interference with OSC schedule development and timetable

Near real-time transaction workflow substantially improves end user experience

Addresses needs during transition as well as the long-term

Integration platform easily leveraged for future needs


Still simple security setup

Near real-time transaction workflow


Most flexibility to gradually increase transaction integration

Real-time transaction workflow

All common data across systems

Co

ns

No business process integration across agencies – batch transaction data exchange

Duplication of data on both systems hinders integrity and may require significant reconciliation

No transaction integration across agencies – batch transaction data exchange

Additional risk of frontloading OSC with Executive Agencies system implementation work

Integration platform required

Project risk increases as additional workload accelerates ahead of the OSC go-live

Moderate increase in complexity of governance

Enhanced governance for common system development and ongoing maintenance and operation

Extra effort during OSC design phase or significant rework later on

Enhanced governance for common system development and ongoing maintenance and operation with substantial risks in an adversarial political climate

Note: Red Italics denote critical items


• #1 and #2 further automate financial management for OSC and Executive Agencies, but independently– Easiest to implement

– Do not improve business process integration across agencies/systems

• #3 affords a significant improvement in business process for agencies– Improves end-to-end workflow and near real-time processing

– Reduces need to reconcile the two systems

– Enables the “black box” translator, links to external systems, and future integration with Executive Agencies systems

– Presents moderate risk to timeline

• #4 and #5 offer even greater integration and business benefits; however they– Require a common data center

– Increase project risk substantially

• Costs may initially be higher to implement #4 and #5, but over the long term ongoing maintenance costs go down

Conclusion: #3 best balance of risks and rewards

Solution Overview and Related Challenges Daniel KeeneSenior ManagerDeloitte Consulting


New York’s solution connects two instances of PeopleSoft Financials using Oracle’s Fusion middleware SOA architecture.

New York Financial Systems Integration Solution

SOA Integration Layer

• Near real time transactions

• Orchestrates interagency approvals

• Keeps budgets and ledgers in synch

• Streamlines processing

Chart of Accounts Crosswalk – Converts old chart of accounts to new chart of accounts

OSC

PeopleSoft

Governor

PeopleSoft

Interfacing Agencies

Statewide Financial Systems Timeline

2009 2010 2011

JOIN

TN

YF

MS

FO

CA

S

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jan Feb Mar AprJul Aug Sep Oct Nov Dec

SI Procurement

H/W Env. Est.Team Training

Requirements Fit-Gap Design Configuration

Agency Interface Dev & System Mods

Agency Data Conversion

Prod H/W Env Est.

Testing

Phase 1 Go-Live

Training

Functional Design Configuration

Develop Enhancements

Design & Construct Reports

Sys. & Integration TestingTest Prep

Training Design & Development

CAS Go-Live

Change Impact Analysis Implement Business Transformation

UAT

DR & HA Plan

Technical Design

Map/Convert Data

Prepare and Conduct OSC UAT

TTT

Implementation Guides

Procure & Install Prod. Env.

Data Conversion Testing

OSC IAM Build & Deploy

IAM Build & Deploy

Design Interfaces Construct Interfaces

Mock Conversions

End User Training

Deploy Imp. Guides

Agency Interface Certification

Copy of FOCAS Instance to NYFMS

Bulkload Layouts to Agencies

Statewide COA Definition

Statewide Vendor File Design

SOA Design

Identity & Access Management Design

Agency Specific COA Definition

Ongoing COA Governance and Maintenance

Procurement Domain Governance and Statewide Vendor File creation, cleansing, agency support

SOA POC and Build SOA Integration Test SOA UATSOA Governance

IAM POC and Build IAM Integration Testing IAM Governance and Maintenance

Statewide Vendor File Live


Top Challenges

Challenge New York Methodology

Defining a uniform statewide chart of accounts

• Dedicated joint COA team• Accounting Domain owners empowered to make decisions• Active participation by agency SMEs

SOA requires integrated business process transformation

• Dedicated joint SOA team• Business owners review proposed business processes and

identify “biggest bang for the buck” - evolve to greater integration over time

Competing priorities of separate constitutional offices

• Creation of formal governance body to resolve issues and make decisions

• Identify “best approach” vs. current approach• Define implementation and post production governance

structures for joint components (e.g., COA, SOA, Statewide Vendor File, Identity & Access Management)

Managing scope and resources of two system implementations under a single program

• Reviewed the OSC project for integration opportunities that leveraged completed or planned work.

• Manage deliverable schedule around distractions due to state budget crisis and seasonal activity

• JGB controls budget across the program and resolves integration issues (people, process, costs)


Questions?

Joan [email protected]

Terry [email protected]

Daniel Keene [email protected]

mailto:[email protected]



Commonwealth of PennsylvaniaBuilding on a Solid FoundationThe Next Wave of Finance Transformation

NASACTAugust, 2009


Pennsylvania’s Timeline for Finance Transformation

ImaginePA - SAPBudget, Finance, Procurement,

Reporting – (Start - March 2001)

HR, Payroll (Start – March 2001)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Go Live 3 Phases between July 2002 and January 2003

Go Live January 2004

EBP Upgrade August 2006

Procurement Upgrade March 2007

XML Go Live July 2007

Agency Kick Off June 2007

Go Live Training November 2007 Reporting

July 2008

Go Live May and June 2009

Revenue Initiative(Start - Within OB 2006)

SRM(Start - February 2006)

Finance Transformation(Start - February 2008)

Scheduled Go Live – May 2009


• Identify and implement strategies to reduce cost• Use available resources more efficiently

– Manage accuracy

• Reduce transaction processing time• Improve invoice processing and imaging• Improve cash management and revenue processing• Design quality assurance function• Improve accountability

– Develop a strong internal audit function

– Develop training organization

PA Finance Transformation Project Goals


Finance Transformation Project Scope

Policy & Process

• Procure to Pay

• Chart of Accounts/GL

• Revenue/Cash Management

• Accounts Receivable

• Grant Accounting

• Budgetary Accounting

Talent & People

• Office of the Budget, Agencies, and External Partners- Change Management and Communications- Organization Impact- Training

Systems & Information

• SAP ECC 6.0 Configuration

• SAP Workflow

• Imaging


Project Governance Was a Key to SuccessSteering Committee

Secretary of Budget

Secretary of Administration

Treasurer

Secretary of Revenue

Secretary of General Services

Chief Accounting Officer

PMO Members

Advisory CommitteeComptrollersCAOCIOs Treasury, Revenue, ProcurementChief Procurement OfficerPMO

PMO

Project ManagerBusiness LeadsTechnical Leads

Communications LeadImplementation Lead

Functional Leads

Agency Deputy Secretaries for Administration

Deployment Team Leads and Agency Liaisons

Project Team Agency CIOS and HR Officials


Specific process impacts to Invoice Processing include:

• Vendor requirements and mailing procedures for invoice submission were changed and enforced

• Invoice Processing moved from a paper-based process to an electronic document-based process using workflow and work items in SAP

• The review and resolution of most issues related to Invoice Processing is shared among the agency and the Comptroller Exception Processing Unit or the Quality Control Unit within Office of Budget. Documents are routed electronically to the groups involved in invoice processing.

Finance Transformation Project


Business practices were and are being standardized across all agencies:

• Even though they were all using SAP, Agency-facing Comptroller units each had significant differences in financial processes

• Now that the Office of Comptroller Operations has been reorganized, financial processes are changing so that they will be consistent across the Commonwealth

• Printing of Revenue documents is done centrally by the Comptroller; agencies no longer have to print and mail documents

• Utility billing for our largest vendors is now done electronically between the vendors’ systems and SAP



• As a result of the FT Project, the organizational structure of the Office of the Budget changed to support the project goals.

• Changes to the current organization include:– Relocation of most Comptroller staff to one site in Harrisburg

– Organization by functional expertise:

• Centralization of Comptroller Services around business functions

• Creation of a Payable Services Unit to manage the Accounts Payable function across the Commonwealth in a centralized structure, including separate units for PO and Non-PO Invoice Processing

• Creation of a Comptroller Exception Processing Unit (including a Quality Control function) to resolve invoice issues

• Creation of a Call Center within the Payable Services Center (PSC) to serve as the primary point-of-contact for Commonwealth vendors and agencies regarding payment issues.



Previous Structure of Office of Comptroller Operations

• Decentralized Comptroller Operations

• Structure did not accommodate the tracking and management of invoices or maximizing efficiencies within processes

• No Training organization

• No Continuous Process Improvement organization

• No support function or strategy function for CAO

Payroll AccountingDavid L. KesslerAssistant Director

Audit Policy andSubrecipient Review

Christine WegemerAssistant Director

Bureau ofCommonwealth

PayrollOperations

David L. KesslerActing Director

Bureau ofAudits

Michael P. BrennanDirector

Payroll Processing

Bobbi L. SweeneyAssistant Director

Bureau ofFinancial Management

Herbert A. MaguireDirector

Chief Accounting Officer

Anna Maria Kiehl

Quality Assurance

Donald UleauAssistant Director

AccountingOperationsMike Burns

Assistant Director

FinancialOperations

VacantAssistant Director

Commonwealth Reporting

Eric Bartholomew Senior Manager

GAAP AccountingLauren M. Dungan

Manager

Financial Program Support

Kenneth WalkerManager

Central VendorManagement

Susan S. FortiniManager

Special ProjectsRichard Cardamone

Manager

Commonwealth Accounting

Dennis Peachey Manager

Budgetary AccountingScott Heisey

Manager

TransportationTimothy A. Guss

Comptroller

Central ServicesJoseph C. Natoli

Acting Comptroller

Liquor Control Boardand PA Port Authorities

Joseph LawrukComptroller

Public Protection and Recreation

Mary K. DeLutisComptroller

Public Health and Human Services

Joyce HaskinsActing Comptroller

Labor Education and Community Services

Connie L. HuberComptroller

AccountingStanley J. McCollumAssistant Comptroller

AccountingJoshua Naylor

Assistant ComptrollerAccounting

Deb ChernicoffAssistant Comptroller

AccountingLinda Sieber

Assistant Comptroller

AccountingCatherine J. Kelly


AccountingGregory R. Sides


AuditsThomas R. George


AuditsJohn Gargiulo

Assistant Comptroller AuditsSteven L. Swalm


AuditsAlan R. Miller


AuditsJoseph C. Natoli


AuditsJenny Righter

Assistant ComptrollerMedical AssistanceJoyce Haskins


Comptroller Offices

Bureaus


• Developed approximately 60 new position descriptions to account for technology and process changes

• Union communication throughout project

• Increased span of control for many positions

• Decreased organizational layers

New Structure of Office of Comptroller Operations

[2] Out of scope

[3] This LCB Services Organization will not be apart of the centralization

Primary Level

Out of scope

Organization Chart Legend

Advisory relationship

Budget

Secretary

Bureau of PayableServices

Bureau of Financial

Management

Bureau of Quality

Assurance

Bureau of Commonwealth

Accounting

Bureau of Audits

Bureau of Liquor Control Board (LCB) Services

BCPO²

Chief Accounting Officer, Office of Comptroller

Operations

Office of Workforce Development and

Training

Bureau of Planningand Management Audit

Committee


Key Cooperation Across Many Agencies


Significant Results in a Short Timeframe

Invoice Processing

• Within the first two months improved processing times from an average of 1200 daily to 1500 daily

• All Purchase Orders and non-Purchase orders are handled in a centralized location and either received electronically or are immediately scanned and imaged (one more wave of agencies to implement)

• All processing now handled via workflow and moves automatically between agencies and the comptroller

• Doing more with less – consolidation of offices and budget demands led to a reduction of positions (vacancies)

Treasury Review• Treasury is no longer scanning invoice documents, reducing the invoice processing time by

5-11 days.

Vendor Accountability

• Vendors now receive returned invoices if they have not prepared them correctly

Utility Billing• 852 invoices totaling $1.5M have been received and posted via electronic billing since

6/8/09

Elimination of “Paper Pushing”

• 200-300 documents are typically printed per day. Since 6/8/09, approximately 4500 documents have been printed centrally instead of being printed and mailed by agencies

Human Resources• Changed many professional positions from civil service to non-civil service to enable better

hiring and professional development opportunities in the future

Accounting• Better utilization of existing staff resources through standardization, reprioritization, and

realignment.

Auditing • Of Comptroller activities on a state-wide perspective


Lessons Learned

• Don’t underestimate the time needed to get the operational support components defined and organized

• Keep all critical stakeholders involved and frequently engage them in critical decisions

• Training is needed at various intervals for the same employees throughout the change process.

• Begin Early with Change Management meetings to get managers comfortable with their role in the change and the reporting tools available to them to manage the change.

Next Steps… Improvements are Ongoing

• Continued process improvement of invoices processing and support functions

• Internal Audit improvements

• Accounting standardization of processes

• Steering Committee continues to meet to indentify areas of interagency collaboration and cost savings

Lessons Learned & Next Steps


•Change Management After Action Review is important to encourage “we’re in this together” approach to change

•On going Communication of expectations and results are essential with all stakeholders

•Continue to Refine Roles, Responsibilities, Workflow, training materials, and expectations

•Inspect what you Expect/Measure Performance

•Empowering Managers to Resolve Issues


Questions?

Anna Maria KiehlChief Accounting Officer/ComptrollerOffice of the BudgetCommonwealth of [email protected]

Christina DorfhuberPrincipalDeloitte [email protected](717) 503-0819



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Maximizing the benefits from your ERP – before and after implementation NASACT August, 2009.

Documents

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