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Making the Business Case Presented by: Art Holdsworth Deputy Director, Management & Budget Oakland County, Michigan October 4, 2007.

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Presentation on theme: "Making the Business Case Presented by: Art Holdsworth Deputy Director, Management & Budget Oakland County, Michigan October 4, 2007."— Presentation transcript:

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2 Making the Business Case Presented by: Art Holdsworth Deputy Director, Management & Budget Oakland County, Michigan October 4, 2007

3 Economic and political trends driving the need to justify technology investments Economic times are getting tougher, so more scrutiny will be given to Big Ticket projects… –Many State and Local economies are weakening –Programs and services are already being reduced in many communities. –Federal and State budget challenges continue with the resulting ripple effect for locals. –Healthcare and other cost increases continue to outpace the inflation rate. –Infrastructure is aging. Privatization of governmental services and inter- governmental collaboration trends placing more pressure on IT Directors to be as cost effective and efficient as possible. Public is demanding more for less, i.e., improving / offering new services without raising taxes

4 Stakeholder Expectations… Constituents / Media You’re wise stewards of the taxpayer’s money! Elected Officials (Board, Council, etc.) You’re not going to embarrass them…You’re going to help them get re-elected! Administration “Show me!” Employees “Why do I have to change?”

5 The Business Case… Demonstrates why the investment in new technology makes financial and public service sense Addresses the intangible / public service aspects of the technology’s application Starts with an ROI / Payback calculation… Gap Analysis Interview all departments Identify shadow systems and other redundancies; quantify labor hours associated with same Include the elimination of these shadow systems / redundancies in the implementation work plan Cost projection Work with IT and key vendors to identify all costs (hardware, communications, professional services, software licenses, annual support fees, etc.) Be sure to include internal labor and staff back fill costs

6 ROI and Payback Quantification of… Cost savings/avoidances Gap Analysis results extrapolated into the ROI Efficiency enhancements Service enhancements / Benefits (that are quantifiable) Revenue enhancements Projecting the timing of the above “savings” Juxtaposing “savings” with “costs” along the same timeline What is an acceptable payback period? Oakland Cty. accepts projects with a six-year payback or less

7 Case Study Oakland County’s Presentation to the Board of Commissioners to Secure Approval for a New Financial / Supply Chain / Time & Labor Management System

8 E-Financial System Implementation Project Presentation to the Board of Commissioners December, 2003

9 History  Migrated from a custom legacy mainframe system to a client-server packaged financial software solution in 1997  Since implementation, the County’s operations have continued to increase in complexity and volume, yet the current Financial Software’s functionality has only moderately progressed and it’s technology platform has been diverging from the County’s standards  The objective now is to migrate to a thin-client, Web-based solution that adheres to current Industry best practices

10 Project Justification  The County must upgrade the hardware and operating software that the Financial Software makes use of  Acknowledging the need to be proactive, the Board passed MR # 02043 providing funding to allow the undertaking of an E-Financial System Project implementation  A competitive bidding process was followed and the finalists were selected as implementers  Performed a gap analysis to refine proposed costs and identify implementation tasks necessary to achieve desired functionality  Identified key business process, reporting, and software configuration requirements necessary

11 The “E-Financial System Implementation Project” has seven components that can be more cost- effectively performed together / sequentially than separately: Data Privacy/Security Technologies Implementation Time & Labor Implementation Human Resources Self-service Human Resources Enhancements Financials Management Implementation Supply Chain Management Implementation PeopleSoft Portals and Analytics The legacy financial software is becoming obsolete and lacks sufficient feature advancement. Long- term viability is a concern. Project Justification

12 Data privacy, infrastructure security, and information integrity is of paramount importance: Management discussions with the County’s contracted Auditors have included concerns over future data security as hacking and national security issues have increased County receives hundreds of virus and hacking attempts daily Homeland Security bulletins consistently warn of the growing likelihood of future Cyber-Terrorism Acknowledging the need to be proactive, the BOC passed an earlier resolution allowing the acquisition of new software Project Justification

13 A competitive bidding process was then followed and an implementer was selected Detailed Return on Investment (ROI) analysis for the E-Financial System Implementation Project yielded a likely 6 year payback The E-Financial System Implementation project will be undertaken in three phases: Phase I - Data Privacy/Single Sign-on (SSO), HR Self- service and Enhancements, Time & Labor; Estimated cost: $4.9 million Phase II - Financial System and Supply Chain Management; Estimated cost: $6.1 million Phase III – Portals, Budgeting, and Analytics; Estimated cost: 3.9 million Project Justification

14 Each Phase is independent from its predecessor After each Phase, a report will be provided to the Board Subsequent Phase appropriation requests will be contingent on the County’s budget situation The License Agreement positions us to be an Application Service Provider (ASP): Our Cities and Townships can access the County’s financial / supply chain / HR system, via OakNet (Countywide fiber optic network linking all public offices), for their own use! This decreases their licensing, implementation, and support costs. It also facilitates intergovernmental cooperation in other areas (e.g., broad-based purchasing of products and services; countywide requests for service management; countywide web-based billing and collections; etc.) Project Justification

15 Anticipated Benefits & Measurements “Self-service” access to information by staff and constituents via portal Elimination of Legacy System administration and support costs Reduction in hardcopy reporting and distribution costs Increase in usage of self- service portal Expenditure reduction for support services Reduction in printed reports Increase in downloads of reports from the portal / new systems

16 Anticipated Benefits & Measurements (cont.) Elimination of standalone and shadow (duplicative) systems to reallocate staff time Elimination of custom systems Reallocation of staff time from portal use Checklist of systems to “turn-off” Reduction in security administration databases Reduction in Support Center calls

17 Anticipated Benefits & Measurements (cont.) Enhanced, proactive supply chain management Increased number of bidders Increased % of purchases via Web Enhanced turnaround time for RFP/bid process E-catalog purchasing by departments Statistical analysis-based reduction in poor performing vendors Enhance early payment discount realization Optimization of purchase quantities

18 Return on Investment Analysis – Benefits/Savings  See attached spreadsheet

19 Return on Investment Analysis - Benefits/Savings Examples of “Savings:” –Cost savings/avoidance from better tracking and monitoring of historical vendor performance, enhanced competitive bidding, proactive contract/vendor performance monitoring, improved vendor selection –Avoidance of postage and pre-printed forms costs –Staff time reallocation due to efficiency enhancements via real-time remote access to data; enhanced access to more helpful data on-line; reports viewable on-line locally, real- time; elimination of "Shadow Systems" and processes; interfaces with user-department systems to eliminate duplicative data entry and/or report preparation time –Savings of incremental annual support cost from licensing a different financial system –Elimination of annual support and professional services costs of legacy system

20 Return on Investment Analysis – Costs  See attached spreadsheet

21 Return on Investment Analysis – Costs Examples of “Costs:” –IT and End-user Labor –Server and Database Software License Acquisitions and On- going Support –Professional Services for Hardware, Database, and Application Software Implementation –Project Manager –Project Staff Training –Travel Costs –Contingency

22 Return on Investment Analysis – Payback Six-year payback…

23 Project Results The Board unanimously approved the resolution appropriating the necessary funds. Phase I went live as scheduled with $802,990 of its appropriation remaining. Phase II went live as scheduled with $281,000 of its appropriation remaining.

24 Lessons Learned Adoption/pushback (passive/aggressive) Aggressive timeline/stressed operations Knowledge transfer (business/technological) Ongoing costs/funding methodology Dependency on implementer Leverage technology dollars across entire enterprise Focus on business re-engineering, not technology implementation Business drives technology, technology does NOT drive business

25 For copies of the ROI Tool or this PowerPoint presentation, contact: Wm. Art Holdsworth holdswortha@oakgov.com Questions & Answers


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