Presentation on theme: "Agenda Highlights of Deloitte’s Global Finance Transformation Survey"— Presentation transcript:
0The Need for Finance Transformation NASACT Conference, Chicago, IllinoisSharon Minnich – Deputy Secretary for Finance AdministrationChristina Dorfhuber – Principal, Deloitte Consulting LLPAugust 12th, 2008
1Agenda Highlights of Deloitte’s Global Finance Transformation Survey Deloitte’ Finance Transformation Framework and MethodologyThe Commonwealth of Pennsylvania’s Finance Transformation JourneyEmbarking on Your Journey – Implementation ConsiderationsQuestions & Answers
2Background of Global Finance Transformation Survey Deloitte Research conducted a global survey to understand the maturity of the financial function in governments across the world.The survey results were supplemented with secondary research and case studies.More than 200 responses from across the world.68315421332284Source: Deloitte Research Global Study on Finance Transformation2
3SummarySignificant gaps exist between current finance capabilities and government needs.Most finance organizations do better in the tactical roles than in the strategic roles that are the most critical to addressing many of government’s biggest fiscal and operational challenges.The greatest need in government finance today is for a finance function that can offer timely information and advice to government leaders on key operational and strategic decisions.Twenty-four percent of respondents are “Finance Masters” who support the business in making strategic decisions and act as a catalyst for change, built on a foundation of excellence in finance stewardship and operations.
4Understanding Finance’s Roles Stimulate behaviors across the organization to achieve strategic and financial objectivesProvide financial leadership in determining strategic business direction and align financial strategiesStrategistStewardOperatorCatalystCFOFocusTriangleFinanceFunctionExecutionPerformanceEfficiencyControlLeading EdgeThresholdThe Four Roles: four distinct roles, all played at the same time, all requiring different leadership and organizational competencies, as well as different operating models for efficiency.Note the sense of a hierarchy (Maslow), and that fulfilling each role at least decently is table-stakes for “moving up” to the next one.First, StewardSecond, OperatorThird, StrategistFinally, CatalystProtect and preserve the assets of the organizationBalance capabilities, costs and service levels to fulfill the finance organization’s responsibilities4
5Mastering Finance in Government – Finance Masters Represent 24% of Responders Most respondents fit into what we classify as “Novices” or “Intermediates”3%24%27%42%HighStrategist + CatalystLowSteward + OperatorInvalid responses comprise 4%.Source: Deloitte Research Global Survey on Finance Transformation
6A Framework for Assessing Finance Transformation Opportunities
7To Become a Leading Finance Organization: You Need to Drive Value Finance organizations can use six “Value Drivers” and four “Enablers” to improve their operations and better achieve their objectives towards becoming a Finance Master.Value DriversEnablers
8The Commonwealth Applied the Diagnosis in Five Critical Areas Process Maturity AssessmentProcure to Pay5.04.03.02.0Internal AuditRevenue /Cash Management1.00.0Current StateFuture VisionCAFR and Financial ReportingAccounting OperationsStage Rating ScaleStage 1 – Nonexistent: No formal process, technology, organization is in placeStage 2 – Developing: Process, tech., org. is partially defined and informally communicatedStage 3 – Defined: Process, tech, org. is defined, documented, understood and operationalStage 4 – Advanced: Process, roles, tech, is defined, documented and introduced throughout the organizationStage 5 – Leading: Continuous planning process is fully integrated into all parts and aspects of the organization
9The Commonwealth of Pennsylvania’s Finance Transformation Journey
10Foundational Initiatives and Their Objectives ERP Implementation: IMAGINE, PAAccess to real time, on line dataAdopt best practicesReplace aging systemsEnhance customer and employee service
11Foundational Initiatives and Their Objectives SRM: SAP Procurement UpgradeImplement end to end e-procurementImplementation of XML for transmittal of PO and InvoicesImprove vendor serviceRegister as a supplier, maintain company data as an administratorSet up additional users for the company for bidding (or other administrators)Maintain order addresses and remit to informationUpdate banking details for electronic payment processingRespond to bid invitationsRevenue InitiativeEliminate duplicative revenue entry systemsStandardize revenue processingProvide real time revenue reporting
12Pennsylvania’s Timeline for Beginning Finance Transformation 2001200220032004200520062007200820092010ImaginePABudget, Finance, Procurement, Reporting – (Start - March 2001)HR, Payroll (Start – March 2001)SRM(Start - February 2006)Revenue Initiative(Start - Within OB 2006)Finance Transformation(Start - February 2008)Scheduled Go Live – May 2009Go Live 3 Phases between July 2002 and January 2003Go Live January 2004Procurement Upgrade March 2007EBP Upgrade August 2006XML Go Live July 2007Go Live Training November 2007Reporting July 2008Agency Kick Off June 2007Scheduled Go Live May 2009
13ERP Implementation: IMAGINE, PA Results to Date – ERPERP Implementation: IMAGINE, PACommonwealth Employees Can: View their benefits, pay, and leave balances on-line change or modify personal information on-lineSelect their benefits on-lineRequest leave and track the approval processFile travel claims on-line and be paid electronicallyView W-2 Federal Tax informationMonthly Transactions: Electronic paychecks processed: 192,000Travel expense vouchers processed: 25,000Human resource actions processed: 206,000Financial transactions processed: 1,300,000Budget transactions processed: 1,666Procurement transactions (requisitions, purchases, etc) processed: 143,000Business reports processed: 25,000Total Monthly Transactions Processed: 1,892,666Recurring Major Activities Supported: Creation of the comprehensive annual financial report and creation of the Governor’s budget
14Results to Date – SRM Implementation Established online catalogs for agency and Commonwealth use. Over 83 “warehouses” have been loaded to date resulting in proper price and item data, streamlines processEstablished Auto POs for suppliers. Today there are 10,349 orders flowing through. 7 percent of POs are Auto.P-card enabled for payment on PO to eliminate manual invoice entrySuppliers register themselves in database and maintain their profiles. More than 10,800 suppliers currently
15Results to Date – Revenue Eliminate duplicative revenue entry systemsApproximately 600 end user trained between November 2007 and April 2008Decommissioned legacy revenue entry system – July 1, 2008Provide real time revenue reportingSAP Reporting running parallel to Department of Revenue reportingAll current revenue reports able to be replaced with new reportsImproved reporting functionalityReceipt of Treasury data directly to SAPPlanning to decommission Department of Revenue legacy reporting system end of 2008
16Finance Transformation Project Goals Identify and implement strategies to reduce costUse available resources more efficientlyManage accuracyReduce transaction processing timeImprove invoice processing and imagingImprove cash management and revenue processingDesign quality assurance functionDevelop a strong internal audit functionDevelop training organization
17Project Scope 17 Procure to Pay Chart of Accounts/GL Policy & ProcessProcure to PayChart of Accounts/GLRevenue/Cash ManagementAccounts ReceivableGrant AccountingBudgetary AccountingCAFR/Financial ReportingSpecial AccountingQuality Assurance/Management ReportingInternal AuditTalent & PeopleOffice of the Budget, Agencies, and External Partner:Change Management and CommunicationsOrganization ImpactTrainingSystems & InformationSAP ECC 6.0 ConfigurationSAP WorkflowOptical Character Recognition (OCR) and/or Imaging17
18Timeline 2008 2009 Commonwealth Technical Upgrade JFMAMJJASONDJFMAMJDevelopment & Unit TestingIntegration/Regression TestingCommonwealthTechnical UpgradeCheck OutCutoverStabilizationPhase 1 – Vision/Plan/DesignPhase 2 - BuildPhase 3 – Deliver & OperatePrepareAnd Doc.ReviewFinance Transformation Project (FT)Executive SessionDesign of Business Processes-Technical and OrganizationalAssessmentFT Go-Live-November 1Stabilized Production EnvironmentComplete Integration TestingProvide a Copy to the FTT
19Workshops and validation sessions across all scope areas: Current StatusWorkshops and validation sessions across all scope areas:Draft design and recommendations document for processes in scopeImaging and workflow analysisPreparing for prioritization session for recommendations19
20Embarking on Your Journey - Implementation Considerations
21Path to Finance Mastery – Two Stage Process Almost no agency in our analysis or experience has been able to master strategist and catalyst capabilities without a foundation in stewardship and operator capabilitiesStage OneImprove Core CapabilitiesStage TwoProvide More Strategic InsightWhat government does:Set strategic prioritiesImprove resource allocationEvaluate policy alternativesSet performance measurements and targetsHow government should do it:Provide better value for moneyProtect value through improved risk managementSupport talent managementComplianceManagement reportingForecasts and budgetary plansFinancial policies, processes, and proceduresThe Finance Masters as defined in this study have in many cases stronger stewardship and operator capabilities than the intermediates.Thus, mastering finance as strategists and catalysts does not mean that stewardship and operator capabilities can be neglected. If anything these core capabilities need to be as robust as possible. The path to becoming a finance master thus involves a two-stage process.Improve core capabilities. This step entails developing analytical capabilities and improving on steward and operator roles. This will be the main initial focus of organizations trying to climb out of the novice category.Provide strategic insight. In this stage, government organizations use their strong analytical abilities to develop strategist and catalyst roles. This is the transition intermediates must make to become finance masters.To move up the curve to finance master, Intermediates must acquire a new set of capabilities that help governments agencies first determine what they should do and second how they should operate.
22Lessons LearnedDiagnose starting place and define expected or desired end and communicate to senior leadershipUnderstand tolerance and capacity for changeCreate business case to bridge gaps, create focus and common groundSecure executive decision makers who understand benefits, willing to make tough decisions, become an active participantAddress the core infrastructure and operational deficiencies before going to far into strategic roleInvolve and engage all parts of the enterprise (HR, IT, Procurement, Treasury, Budget, Comptroller, Revenue, Agencies)Stage and pilot your implementation
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