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Agenda Highlights of Deloitte’s Global Finance Transformation Survey

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Presentation on theme: "Agenda Highlights of Deloitte’s Global Finance Transformation Survey"— Presentation transcript:

0 The Need for Finance Transformation
NASACT Conference, Chicago, Illinois Sharon Minnich – Deputy Secretary for Finance Administration Christina Dorfhuber – Principal, Deloitte Consulting LLP August 12th, 2008

1 Agenda Highlights of Deloitte’s Global Finance Transformation Survey
Deloitte’ Finance Transformation Framework and Methodology The Commonwealth of Pennsylvania’s Finance Transformation Journey Embarking on Your Journey – Implementation Considerations Questions & Answers

2 Background 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. 68 31 54 2 13 3 2 2 8 4 Source: Deloitte Research Global Study on Finance Transformation 2

3 Summary Significant 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.

4 Understanding Finance’s Roles
Stimulate behaviors across the organization to achieve strategic and financial objectives Provide financial leadership in determining strategic business direction and align financial strategies Strategist Steward Operator Catalyst CFO Focus Triangle Finance Function Execution Performance Efficiency Control Leading Edge Threshold The 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, Steward Second, Operator Third, Strategist Finally, Catalyst Protect and preserve the assets of the organization Balance capabilities, costs and service levels to fulfill the finance organization’s responsibilities 4

5 Mastering Finance in Government – Finance Masters Represent 24% of Responders
Most respondents fit into what we classify as “Novices” or “Intermediates” 3% 24% 27% 42% High Strategist + Catalyst Low Steward + Operator Invalid responses comprise 4%. Source: Deloitte Research Global Survey on Finance Transformation

6 A Framework for Assessing Finance Transformation Opportunities

7 To 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 Drivers Enablers

8 The Commonwealth Applied the Diagnosis in Five Critical Areas
Process Maturity Assessment Procure to Pay 5.0 4.0 3.0 2.0 Internal Audit Revenue /Cash Management 1.0 0.0 Current State Future Vision CAFR and Financial Reporting Accounting Operations Stage Rating Scale Stage 1 – Nonexistent: No formal process, technology, organization is in place Stage 2 – Developing: Process, tech., org. is partially defined and informally communicated Stage 3 – Defined: Process, tech, org. is defined, documented, understood and operational Stage 4 – Advanced: Process, roles, tech, is defined, documented and introduced throughout the organization Stage 5 – Leading: Continuous planning process is fully integrated into all parts and aspects of the organization

9 The Commonwealth of Pennsylvania’s Finance Transformation Journey

10 Foundational Initiatives and Their Objectives
ERP Implementation: IMAGINE, PA Access to real time, on line data Adopt best practices Replace aging systems Enhance customer and employee service

11 Foundational Initiatives and Their Objectives
SRM: SAP Procurement Upgrade Implement end to end e-procurement Implementation of XML for transmittal of PO and Invoices Improve vendor service Register as a supplier, maintain company data as an administrator Set up additional users for the company for bidding (or other administrators) Maintain order addresses and remit to information Update banking details for electronic payment processing Respond to bid invitations Revenue Initiative Eliminate duplicative revenue entry systems Standardize revenue processing Provide real time revenue reporting

12 Pennsylvania’s Timeline for Beginning Finance Transformation
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ImaginePA Budget, 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 2009 Go Live 3 Phases between July 2002 and January 2003 Go Live January 2004 Procurement Upgrade March 2007 EBP Upgrade August 2006 XML Go Live July 2007 Go Live Training November 2007 Reporting July 2008 Agency Kick Off June 2007 Scheduled Go Live May 2009

13 ERP Implementation: IMAGINE, PA
Results to Date – ERP ERP Implementation: IMAGINE, PA Commonwealth Employees Can: View their benefits, pay, and leave balances on-line change or modify personal information on-line Select their benefits on-line Request leave and track the approval process File travel claims on-line and be paid electronically View W-2 Federal Tax information Monthly Transactions: Electronic paychecks processed: 192,000 Travel expense vouchers processed: 25,000 Human resource actions processed: 206,000 Financial transactions processed: 1,300,000 Budget transactions processed: 1,666 Procurement transactions (requisitions, purchases, etc) processed: 143,000 Business reports processed: 25,000 Total Monthly Transactions Processed: 1,892,666 Recurring Major Activities Supported: Creation of the comprehensive annual financial report and creation of the Governor’s budget

14 Results 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 process Established 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 entry Suppliers register themselves in database and maintain their profiles. More than 10,800 suppliers currently

15 Results to Date – Revenue
Eliminate duplicative revenue entry systems Approximately 600 end user trained between November 2007 and April 2008 Decommissioned legacy revenue entry system – July 1, 2008 Provide real time revenue reporting SAP Reporting running parallel to Department of Revenue reporting All current revenue reports able to be replaced with new reports Improved reporting functionality Receipt of Treasury data directly to SAP Planning to decommission Department of Revenue legacy reporting system end of 2008

16 Finance Transformation Project Goals
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 Develop a strong internal audit function Develop training organization

17 Project Scope 17 Procure to Pay Chart of Accounts/GL
Policy & Process Procure to Pay Chart of Accounts/GL Revenue/Cash Management Accounts Receivable Grant Accounting Budgetary Accounting CAFR/Financial Reporting Special Accounting Quality Assurance/Management Reporting Internal Audit Talent & People Office of the Budget, Agencies, and External Partner: Change Management and Communications Organization Impact Training Systems & Information SAP ECC 6.0 Configuration SAP Workflow Optical Character Recognition (OCR) and/or Imaging 17

18 Timeline 2008 2009 Commonwealth Technical Upgrade
J F M A M J J A S O N D J F M A M J Development & Unit Testing Integration/Regression Testing Commonwealth Technical Upgrade Check Out Cutover Stabilization Phase 1 – Vision/Plan/Design Phase 2 - Build Phase 3 – Deliver & Operate Prepare And Doc. Review Finance Transformation Project (FT) Executive Session Design of Business Processes - Technical and Organizational Assessment FT Go - Live - November 1 Stabilized Production Environment Complete Integration Testing Provide a Copy to the FTT

19 Workshops and validation sessions across all scope areas:
Current Status Workshops and validation sessions across all scope areas: Draft design and recommendations document for processes in scope Imaging and workflow analysis Preparing for prioritization session for recommendations 19

20 Embarking on Your Journey - Implementation Considerations

21 Path 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 capabilities Stage One Improve Core Capabilities Stage Two Provide More Strategic Insight What government does: Set strategic priorities Improve resource allocation Evaluate policy alternatives Set performance measurements and targets How government should do it: Provide better value for money Protect value through improved risk management Support talent management Compliance Management reporting Forecasts and budgetary plans Financial policies, processes, and procedures The 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.

22 Lessons Learned Diagnose starting place and define expected or desired end and communicate to senior leadership Understand tolerance and capacity for change Create business case to bridge gaps, create focus and common ground Secure executive decision makers who understand benefits, willing to make tough decisions, become an active participant Address the core infrastructure and operational deficiencies before going to far into strategic role Involve and engage all parts of the enterprise (HR, IT, Procurement, Treasury, Budget, Comptroller, Revenue, Agencies) Stage and pilot your implementation

23 Questions & Answers

24 Christina Dorfhuber Sharon Minnich
Contact Information Christina Dorfhuber Principal, Deloitte Consulting LLP Sharon Minnich

25 This presentation contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this presentation, rendering business, financial, investment, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this presentation.

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