Partridge

Achieving World-Class Performance in Finance, HR/Payroll, IT and Procurement

NASACT Benchmarking Overview

Q3, 2007

Page 2

Topics

Benchmarking in state government – background

Why did the State of Arizona participate?

Overview of the benchmark deliverables and process

What is the State of Arizona doing now?

Objective: Understand how benchmarking and corresponding process improvement can demonstrate strategic leadership and success!

Page 3

Background

State steering Committee formed in 2004. A state steering committee was formed with NASACT in early 2004 to explore the use of benchmarking. The Hackett-Accenture team was selected to conduct a benchmarking pilot for the finance function.

Pilot Benchmark project. Six states and selected agencies participated in the finance benchmark pilot (Alaska, Arizona, Nebraska, Oregon, Tennessee and Washington). Pilot results were presented at Biloxi conference in November 2004.

State RFP issued through NASACT. In April 2005 NASACT conducted a formal RFP to select a single benchmarking service provider.

Vendor selected and tailored program for states. In June 2005 The Hackett-Accenture team was formally selected to support the NASACT benchmarking program in Finance, HR/Payroll, Procurement, and IT. Program launched at NASACT annual conference, August 2005. Contract vehicle now in place for states to select any or all benchmarks, based on their needs.

Page 4

States Participating as of 7/1/07

Program Launched at NASACT Conference in Portland in August 2005

State Benchmark Status

Tennessee FIN, HR, IT, PROC Completed

Arizona FIN Completed

Delaware FIN, PROC Completed

Colorado FIN Completed

Massachusetts FIN Completed

Mississippi FIN, HR, IT, PROC Completed

Georgia FIN, IT Completed

Alaska HR Active

Alabama FIN, HR, PROC Active

Oklahoma FIN Active

New Jersey FIN, HR, PROC Active

Page 5

There are many, and different, reasons for State Governments to benchmark

1. Back office Performance Metrics/Data - Where are we and how do we compare to other states, as well as world-class organizations. Helps to establish project priorities.

2. Baseline and future measurement for technology investments - Provides a baseline, supporting a “before and after” comparisons when undertaking an improvement project (such as a new ERP)

3. Foundation for Business Case - Provides performance insights and quantitative measures into process areas for improvement that will be the starting point for change and a business case.

Page 6

The performance gap between world-class organizations and their median peers The performance gap between world-class organizations and their median peers continues to be significant continues to be significant

MedianWorld-Class

6%

World-class are investing more in IT

8,7019,198

MedianWorld-Class

49%

$6.3 million in savings per $ billion

of revenue

1.24%

0.61%

MedianWorld-Class

9%

$1.7 million in savings per 10,000

employees

1,995

1,822

MedianWorld-Class

30%

$1.9 million in savings per $ billion

of spend

0.63%

0.82%

Hackett 2007 Functional Performance Data Hackett 2007 Functional Performance Data

IT costper end-user

Finance costas a % of revenue

HR costper employee

Procurement cost as a % of spend

FINANCE PROCUREMENTHUMAN RESOURCES IT

Page 7

Transactional Compliance and Risk Management

Budgeting and Analysis

Hackett’s Finance benchmark focuses on 8 process groups that are discretely defined

Cash DisbursementsAccounts PayableTravel and ExpensesProgram Payables

Revenue CycleCreditCustomer billingCollectionsCash Application

Accounting and External Reporting

Fixed Assets Interfund/InterdepartmentalAccountingGeneral Ledger AccountingProject Grant and Cost AccountingExternal Reporting

Treasury ManagementCash ManagementCapital and Risk Management

Compliance ManagementRegulatory Compliance and AuditingProcess Certification

Budget Preparation and ReportingLong Term ForecastingAnnual/Bi-Annual budgetingBudget and Performance Reporting

Business analysisDepartment/Program Analysis

Finance Function ManagementFunction OversightPersonnel ManagementPolicy and Procedures Oversight

Management & Administration

Page 8

Transactional Employee LifeCycle

Planning & Strategy

Hackett’s HR/Payroll benchmark framework

Total Rewards AdministrationHealth and Welfare AdministrationPension and Savings AdministrationCompensation Administration

Payroll ServicesTime and AttendancePayroll Administration

Data Management, Reporting and ComplianceCompliance ManagementEE Data ManagementHR Reporting

Staffing ServicesRecruiting and StaffingExit Process

Workforce Development ServicesLearning and DevelopmentCareer PlanningPerformance Management

Organizational EffectivenessLabor Relations AdministrationOrganization Design and MeasurementEmployee Relations

Total Rewards PlanningBenefits PlanningCompensation Planning

Strategic Workforce PlanningWorkforce gap assessmentLeadership gap assessment


Function ManagementFunction oversightPersonnel managementPolicy and procedures oversight

Page 9

Operations & ComplianceSourcing &

Supplier Management

Planning & Strategy

Hackett’s Procurement benchmark framework

Supply Data ManagementSupplier master managementItem master/content management Catalog managementContract master management

Requisition and PO ProcessingRequisition processingPurchase order processingRequisition and purchase order support

Customer ManagementExternal Customer ManagementInternal Customer ManagementProduct Development and Design Support

Sourcing ExecutionRequirements definition and supplier biddingNegotiation and supplier contract creation

Supplier Management and DevelopmentSupplier ManagementSupplier Partnering

Function Strategy and Performance Mgt

Strategic and operational planning

Sourcing and Supply Base StrategySourcing and Supply Base data gatheringSourcing and Supply Base Analysis

Function MgtFunction oversightPersonnel mgtPolicy and procedures oversight


Supplier SchedulingSupply requirements reviewSupplier schedulingOrder releaseInbound tactical supply managementDelivery coordination

Receipt ProcessingMaterials and goodsServices

Compliance ManagementInternal Compliance ManagementExternal Compliance

Page 10

Technology Infrastructure

Application Management

Planning & Strategy


Infrastructure ManagementOperations

ManagementSecurity

ManagementDisaster Recovery

Planning

End User SupportHelp DeskEnd User Training

Infrastructure DevelopmentPlanningConstruct Implement

Control & Risk Management

Hackett’s IT benchmark framework

Application MaintenanceApplication

SupportEnhancement

DeliveryUpgrade

Execution

Application Development and ImplementationPlanningConstructImplement

Quality AssuranceChange

Management

Risk ManagementAudit and

Compliance

IT Business PlanningAlignmentProject

PrioritizationCommunication

Enterprise Architecture PlanningGovernanceStandards

Management

Emerging TechnologiesTechnology

Evaluation

Function ManagementFunction oversightPersonnel managementPolicy and procedures oversight

Page 11

Data collection activities - Web based collection tool and reporting

Page 12

Processes Accounts payable Travel and expense Freight payments

Activities Processing and routing of incoming mail

specific to the cash disbursements process including the handling of invoices, bills of lading & receiving documents and expense reports

Matching of supplier invoice, purchase order, receipt acknowledgement and other required documents or information to validate and verify payment can be made to suppliers.

(More)

Hackett’s process taxonomy assures “apples-to-apples” comparisons

Sub-Processes Sourcing execution Supplier set-up Pre-processing Verification / approval Processing Discrepancy resolution Payments Inquiry response File / store / retrieve Reconciliation/ accrual/compliance

Process Groups

Cash disbursements

Empirical data is collected based on activities performed, regardless of job title, reporting hierarchy, geographic location, or organization structure

Data collection

=

Page 13

Planning/Kickoff

Review Question Set Scope and Definitions

Identify Data Sources Establish Project

Coordinator Identify Location /

Function Coordinators Conduct Project

Education and Training

Data Collection & Other Inputs

Collect All Required Quantitative Data

Practice Assessment Workshop

Conduct Executive Interviews

Conduct Stakeholder Survey

Data Validation

Data Consolidation Data Review and

Validation Client Signoff on Data

Accuracy: Reflecting Operations of the State/Agency

Analysis / Draft Report

Conduct Data Analysis Develop

Recommendations and High Level Action Plan

Assemble Draft Results Report for State Leadership

Review Draft Report

ResultsPresentation

Present Benchmark Results and Associated Findings to State/Agency Leadership

Quantification of Financial Impact of Improved Performance

Prioritization of Opportunities

Determine Actions Required to Close Performance Gaps

Enablement through tools and methodology

Collection of baseline data as well asvalidation of data with Hackett

Analysis of baseline data versus benchmarkdatabase - development of recommendations

NASACT Utilizes Hackett’s Proven Benchmark Process and Tools (12-16 week process from kickoff)

Page 14

Week 1-2 Week 3-4 Week 5-6 Week 7-8 Week 9-10 Week 11-12 Week 13-14 Week 15-16

Training

Data Collection

Analysis & Preliminary Results

Final ResultsDraft Data

Data Validation

Pre-Planning

Hackett’s Benchmarks can be executed in 12-16 weeks (approximate timeline)

Page 15

Benchmark program costs

Functional benchmark Includes:

- Unlimited agency participation - Single report to the state, with agency comparisons on selected high level metrics (i.e. finance cost as a percent of spend) - Access to online data collection tools and final results data - Onsite executive interviews - Draft review and final presentation (1/2 day sessions each)

Functional Benchmark

Total SOW agreement fees

Percent discount realized

Realized price per benchmark

1 benchmark $80,000 $80,000 2 benchmarks $144,000 10% $72,000 3 benchmarks $210,000 12.5% $70,000 4 benchmarks $272,000 15% $68,000

State resource needs:•State coordinator half time for 6-8 weeks•Agency coordinators half time for 1-2 weeks•Agency data collectors 2-3 days•Core team and management to participate in data review and final report meeting (3-6 hours)

Administrative fee to NASACT 3%

Plus: travel related expenses – capped at $10,000 for the first benchmark and $9,000for each additional benchmark

Page 16

The Hackett Value GridTM

Hackett Value Grid™

ABC Co.Company

EFFECTIVENESS (y-axis) Partnership

Quality

Talent Management

Flexibility

Access To Information

EFFECTIVENESS (y-axis) Partnership

Quality

Talent Management

Flexibility

Access To Information

EFFICIENCY (x-axis) Cost

Cycle Time

Technology Enablement

Complexity

EFFICIENCY (x-axis) Cost

Cycle Time

Technology Enablement

Complexity

Although this is a sample, each dot on The Hackett Value Grid will represent organizations that participated in the 2007 Performance Study. The star willrepresent your organization and indicate how it compares in the areas of efficiency and effectiveness to the other participants.

Page 17

What does it take to achieve world-class performance?Common characteristics of executives leading world-class organizations

World-Class

• Use metrics to determine priorities, not “intuition” • Establish infrastructure to lead change• Evaluate strategic alternatives and business case

• Track and communicate progress consistently to established performance targets

• Fact-based award recognition

• Understand proven approaches of world-class organizations• Select “right” practices vs. maximum possible

Prioritize and

Manage

Identify Certified Practices

Execute

Continuous Measurement

ObjectivelyQuantify

Opportunity

• External comparison of internal performance

to world-class standards

• Develop a holistic solution encompassing People (Organization) Business Process

• Technology configuration and rapid execution

Use of Information Technology

Benchmarking and Best Practices are the foundation

Page 18

Arizona Benchmark Overview

Page 19

Hackett Value Grid

Finance Efficiency

Fin

an

ce E

ffe

ctiv

en

ess

Fina

nce

has

the

right

stru

ctur

e in

pla

ceto

pro

vide

valu

e

How efficiently is Finance meeting business demands

World-Class

1Q

1Q

High

HighLow

State of AZ

Capitalizing on identified opportunities will enable State of AZ to increase finance’s effectiveness and efficiency

Key Effectiveness drivers: + Company standard for data definitions and code

standards + Suppliers making inquiries using web application + Cost analysis provided on target + Integration of strategy, tactics & budgeting + Credit sales collected within terms + High return rate on invested funds + Formal documented strategic plan + Days to report general accounting results - Billing errors - Role of Finance in strategy - No balanced scorecards - Time spent on business analysis - Managers perform BPR online - Use of non-financial measures Key Efficiency drivers: + Days to Close & Report + General Accounting as a % of operating budget + Finance cost as % of operating budget - Days to complete the budget - A/P to G/L integration - Number of process applications - Integration between order entry/sales application

and billing - Cash disbursements automated - Cash Disbursement Transactions per FTE - Fixed asset integration with accounts payable - Cash Disbursements as a % of operating budget - Cash disbursement cost per transaction - Days to prepare ad hoc business performance

reports

Page 20

Overall findings and observations

State of AZ’s finance cost as a percent of revenue/operating budget is 0.33%, placing it in the 1st quartile of the peer group

A solid shared service infrastructure is in place and overall vision is strong, however, opportunity exists to expand to larger agencies/departments

State of AZ’s resource allocation reflects a greater focus on transactional activities than World Class– Transactional FTEs are comparable to World Class but only 13% of Arizona’s Finance staff is focused on planning and analysis

compared to 25% in World Class organizations– Organizational fragmentation of processes exists

Business requirements are being satisfied by brute force efforts in many cases– Ability to mine and use information for strategic purposes is challenging; with significant reliance on standalone spreadsheets – Benchmark indicates low utilization of best practices in several areas further limiting the ability of Finance to drive incremental

value to the State State of AZ is under-investing in technology

– World Class organizations spend 11% of total operating budget/revenue on technology vs. 5% for the State– Limited tools exist (common ERP, web-based tools and self-service reporting) to enable best practice based solutions

Page 21

Summary findings by Process Group

Transaction processing – Opportunities exist in all the transactional processes to reduce cycle times– The cash disbursement process has low automation & process fragmentation, resulting in high staffing, high

transaction costs, and low productivity. Staffing is fragmented across 20-25 locations, with an average of 10 FTEs per location

– Revenue cycle staffing and costs are comparable to World Class but effectiveness is reduced by greater error rates

Risk & Compliance– Inherent government complexity may be leading to significant compliance management staffing

requirements

Decision Support– There are minimal resources to focus on the value added processes of planning, performance management,

and business analysis– Effectiveness opportunities exist by positioning the finance function as a strategic partner with operations

and fully integrating tactical and strategic business plans– Although considered easy, the budget process is manual and long

Page 22

The State of AZ allocates 68% of its finance staff time to transactional activities

33%

15%

20%

2%

11%

8%

5%6%

Cashdisbursements

Revenue cycle Acctg & externalreporting

Treasurymanagement

Compliancemanagement

Planning &performance

Business analysis Mgmt andadministration

Transactional

Page 23

State of AZ Quartile 1

Quartile 2

Quartile 3

Quartile 4

Finance cost as a % of revenue/operating budget places State of AZ in the first quartile of the peer group

0.24%

0.46% 0.50%0.01%

0.05%0.03%

0.05%

0.11% 0.11%

0.03%

0.08%0.09%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

State of AZ Median World Class

Labor Outsourcing Technology Other

Finance cost as a % ofrevenue/operating budget

Quartile breakdown as a % of revenue/operating budget

0.25%

0.59%

0.70%

1.23%

2.31%

0.33%

0.33%

0.70%0.73%

World Class0.73%

Page 24

0% 20% 40% 60% 80% 100%

State of AZ

Median

World Class

Transaction processing Control and risk mgmt

Planning and strategy Mgmt and administration

Finance resource allocation

State of AZ’s total FTEs are less than the Median or World Class, but only 13% focus on planning and analysis

Finance Staffing (FTEs)(Median and World-Class are normalized based on

revenue/operating budget)

0

100

200

300

400

500

600

700

800

900


Transaction processing Control and risk mgmt

Planning and strategy Mgmt and administration

626

800852

13%

25%

Page 25

$51,274

$77,798 $79,345


State of AZ’s average labor rates are 35% lower than World Class and may be masking overall inefficiency

Average fully loaded labor rates

The Hackett Group is not a compensation analysis firm. The Median and World Class figures represent organizations throughout the United States. They are not specific to only the Arizona Market.

Page 26

Comparative Process Analysis

Page 27

Resources committed to Cash Disbursements is greater than both median and world class

0.0

50.0

100.0

150.0

200.0

250.0

Cashdisbursements

Revenue cycle Acctg & externalreporting


Transaction processing FTEs

0.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

0.14%

Cashdisbursements

Revenue cycle Generalaccounting &

externalreporting


Process cost as a % ofRevenue/operating budget

Page 28

5 5 5

13 3

0

2

4

6

8

10


Days to close Days to report

0

2

4

6

8

10

Cash disbursements Accounts receivable Credit reviews


General accounting: days to close & report

Transactional cycle times – in days

Transactional cycle times exceed the Median and World Class in Cash Disbursements and Revenue Cycle

Complexities and/or regulatory requirements of private sector organizations do not exist at the State of Arizona

Page 29

0.00%

0.01%

0.02%

0.03%

0.04%

0.05%

0.06%

0.07%


Cash Disbursements cost as a % ofRevenue/operating budget

5,741

12,573

18,886

0

5,000

10,000

15,000

20,000


Transactions per FTE

$7.38

$4.08

$2.03

$0.00

$2.00

$4.00

$6.00

$8.00


Cost per transaction (invoices/T&E reports)

0%

5%

10%

15%

20%

25%

30%


Percent cash disbursement transactions automated

Low automation, and process fragmentation are driving Cash Disbursement units costs to be 3 times World Class

Page 30

The highly fragmented Cash Disbursements process should be considered a candidate for shared services

Total State of AZ Accounts Payable Travel & ExpensesLocations in Process 58 30 28

Total FTEs in Process 207.83 177.28 30.55

Locations with FTEs =< 10 52 24 28% of Total Locations 90% 80% 100%

Cash Disbursements

Page 31

Best practices State of AZTop

Performer

Degree of integration of the purchasing application to the accounts payable application

Suppliers submit their invoices electronically

Percentage of travelers completing and submitting their expense reports via an online application

Percent of expense reports requiring management approval

Percent of expense reports audited for compliance (e.g., sample size)

Best practices analysis for cash disbursements

Highly Integrated

4% 54%

0% 100%

93% 26%

97% 4%

None/Completely Manual

Page 32

0.00%

0.02%

0.04%

0.06%

0.08%

0.10%


Revenue Cycle cost as a % ofRevenue/operating budget

0.0

50.0

100.0

150.0

200.0

250.0


Revenue Cycle FTEs

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%


Occurrence of billing errors

0%

20%

40%

60%

80%

100%


Percent customer bills processed electronically

Revenue cycle staffing and process costs are comparable to World Class, effectiveness is impacted by re-work

Page 33

Accounting & external reporting cost as a % of revenue/operating budget

Accounting & external reporting FTEs

General accounting & external reporting are performing at World Class

Days to close Percent automated journal entries

0

1

2

3

4

5


0.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

0.14%


0.0

50.0

100.0

150.0

200.0

250.0


0%

20%

40%

60%

80%

100%


Page 34

0.000%

0.010%

0.020%

0.030%

0.040%

0.050%

0.060%

0.070%


0

500

1,000

1,500

2,000

2,500

3,000

3,500


Compliance management cost as a % ofRevenue/operating budget

Compliance management FTEs

Audits per internal audit FTEs External audits fees($000)

Inherent government complexity may be requiring greater compliance staffing than World Class

0.0

20.0

40.0

60.0

80.0


0

2

4

6

8

10

12

14


Page 35

0

100

200

300

400


0

1,000

2,000

3,000

4,000

5,000


Treasury management cost as a % ofRevenue/operating budget

Treasury management FTEs

Annual gross banking fees ($000)

There may be an opportunity to rationalize the number of bank accounts required in Treasury management

Bank accounts

0.000%

0.005%

0.010%

0.015%

0.020%


0.0

10.0

20.0

30.0

40.0


Page 36

State of AZ is achieving favorable results in Treasury investments

Average return on invested funds

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%


Page 37

Focusing on decision support processes will enable finance to increase its overall effectiveness

0.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

Planning &performancemeasurement

Businessanalysis

Managementand

administration


Process cost as a % ofrevenue/operating budget

Planning, analysis and decision support FTEs

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

Planning &performance

Businessanalysis

Mgmt andadministration


Page 38

0 50 100 150 200 250


Days to complete the budget

Number of line items in budget

Budget complexity (line items) is World Class but automated tools may improve the overall cycle time

0

50

100

150

200

250


Percent of customers that describe the budgetprocess as convenient and easy

0%

10%

20%

30%

40%

50%


% of operation managers using online budgeting application

0%

10%

20%

30%

40%

50%

60%

70%


Page 39

0.00%

0.01%

0.02%

0.03%

0.04%

0.05%

0.06%

0.07%


0

2

4

6

8

10


Business analysis cost as a % ofRevenue/operating budget

Business analysis FTEs

The few resources focused on business analysis consider themselves operational partners and are productive

Programs/services per FTE

0.0

20.0

40.0

60.0

80.0

100.0


60%

40%

Partner

Support group

Self assessment of finance analysts level of partnering with operations management

Page 40

State of AZ’s analysts spend less time analyzing information than the Median or World Class

Allocation of analysts’ time for standard reports

0% 20% 40% 60% 80% 100%

State of AZ

Median

World Class

Collecting / compiling data Analyzing information

Page 41

Technology Analysis

Page 42

0.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%


0%

20%

40%

60%

80%

100%


OtherTechnologyOutsourcingLabor

Investment in technology is lower than the Median or World Class, when viewed against staffing or revenue/budget

Technology cost as a % of total cost Labor v. technology cost per FTE

Finance technology cost as a % of revenue/operating budget

$10,977

$13,815 $18,103

0

20,000

40,000

60,000

80,000

100,000

120,000


Tech per FTELabor per FTE

16% 15% 16%

Page 43

Low integration and cross functionality within transactional processes impacts Finance’s efficiency

Customer billing application integrationAP to GL application integration

0% 50% 100%

Highly Integrated

Medium

Low

None/CompletelyManual

0% 20% 40% 60% 80%

High (>75%)

Medium (25%-75%)

Low (<25%)

None

Note: graph represents a distribution of median companies

State of AZ - Medium State of AZ - None

Page 44

0%

20%

40%

60%

80%

100%

As a stand aloneapplication

As a graphicaluser inerface

As a formstemplate

To performanalysis

State of AZ Median

Spreadsheet usage in budgeting and forecasting

There is limited deployment of decision support tools and a greater leverage of spreadsheets for the budget process

0%

10%

20%

30%

40%


Use of data management and analysis tools (Data Warehousing/Data Marts)

0% 10% 20% 30%

High (>75%)

Medium (25%-75%)

Low (<25%)

None

Note: graph represents a distribution of median companies

State of AZ - None

Business-simulation models used scenario analysis

Page 45

Percent of reports distributed electronically

Technology does not adequately support the cash remittance or internal reporting processes

Percent of remittances settled electronically

0%

10%

20%

30%

40%

50%


0%

20%

40%

60%

80%

100%


Hackett defines “Electronic Distribution” as completely system driven. Reports attached to e-mails do not count as electronic. E-mail addresses must be pre-loaded into an application that sends the reports.

Page 46

Recommendations(Discussion)

Page 47

In summary, the overall benefits available to the State of AZ Finance are significant

Ability to significantly leverage the scale opportunities of the State

Improved efficiency and effectiveness across Finance and its stakeholders

Rapidly improved transaction processing service levels (i.e., shorter cycle times, reduced error rates)

Improved ability to enhance available information, optimize processing costs and purchased costs through strong integration and partnering with stakeholders

Easier access to information will reduce the “Brute Force” effort required today, freeing up more time for value-added analysis

Richer jobs and an enhanced Finance reputation by performing more strategic/advisory role vs. controllership/transaction oriented role

Page 48

+ + = Technology leverage System complexity Standardization Centralization

Staffing levels Resource allocation Partnering Organizational

Productivity Cycle times Complexity

How you manage your

staff

How you manage your

staff

How you enable your

staff

How you enable your

staff

How you execute

How you execute

Low cost High value Service levels Risk management

Performance measurement Access/availability

Data vs. intelligence Actionable

Improving all key business drivers simultaneously is essential to becoming world-class

World-classperformance

ProcessTechnology

Information

People

Page 49

Eliminate Simplify Automate

Observed Best Practices

• Redundant or ineffective approvals (e.g. expense reports, requisitions)

• Duplicate data capture • Immaterial transactions

(journal entries, small $ payments)

• Paper invoices/Checks• Allocations• Manual JEs• ETC

• Chart of Accounts• Allocations• Cost Centers• Technology

standards and systems

• Data Definitions• Customer/Supplier

Databases

• ETC

• Employee/Customer/ Supplier Self service

• Delivery of management information

• Remaining manual JEs

• ETC

To move from transaction processor to business partner the best have followed the same path

Page 50

We recommend that the State of Arizona focus on three high priority actions

Action #1 - Develop best practice based solutions for each core finance process

Action #2 - Define and implement an expanded shared Finance operating model

Action #3 - Better leverage technology across Finance

Page 51

Next Steps

Validate benchmark findings Decide on a maximum of 2 – 4 initiatives that will be the focus for

improvement Establish transition committee and process owner Evaluate current project landscape to avoid duplication / competition of

effort Start initiatives and measure permanent progress

– Set quarterly timelines including quantitative targets– Measure, report and communicate progress on a quarterly basis

Keep focus and communicate, communicate, communicate

Page 52

What is the State of Arizona strategically doing now?

Submitted Budget Request for ERP/Purchasing System—Leverage Technology

Travel Management Subsystem—Utilizes technology to implement cash disbursements best practice

Web-based Vendor Inquiry—Utilizes technology to provide payment information to vendors (cash disbursements best practice)

Expanding Shared Services—Central Services Bureau & Human Resources

Data Warehouse Planned—Utilizes Technology to address Business Information Analysis

Participating in Payroll Benchmark

Page 53

What does it take to achieve world-class performance?Common characteristics of executives leading world-class organizations

World-Class

• Use metrics to determine priorities, not “intuition” • Establish infrastructure to lead change• Evaluate strategic alternatives and business case

• Track and communicate progress consistently to established performance targets

• Fact-based award recognition

• Understand proven approaches of world-class organizations• Select “right” practices vs. maximum possible

Prioritize and

Manage

Identify Certified Practices

Execute

Continuous Measurement

ObjectivelyQuantify

Opportunity

• External comparison of internal performance

to world-class standards

• Develop a holistic solution encompassing People (Organization) Business Process

• Technology configuration and rapid execution

Use of Information Technology

Benchmarking and Best Practices are the foundation

Page 54

Questions or Comments?

? ?? ?

Partridge

Documents

fin arizona

nasact benchmarking

state of arizona

fin colorado

fin massachusetts

georgiaactive fin

benchmarking pilot

nasact conference