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1 Realizing Additional Value from ERP Systems: Beyond Initial Implementation Donald E. Edmiston Senior Government Advisor, BearingPoint William Greer Director,

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Presentation on theme: "1 Realizing Additional Value from ERP Systems: Beyond Initial Implementation Donald E. Edmiston Senior Government Advisor, BearingPoint William Greer Director,"— Presentation transcript:

1 1 Realizing Additional Value from ERP Systems: Beyond Initial Implementation Donald E. Edmiston Senior Government Advisor, BearingPoint William Greer Director, State and Local Government, SAP Harvey C. Eckert Commonwealth Comptroller, Commonwealth of Pennsylvania

2 2 Value - Where To Look Donald E. Edmiston Senior Government Advisor, BearingPoint

3 3 Enterprise Resource Planning ERP is an enterprise-wide project that involves the redesign of business processes ERP is a business transformation effort, not a technological project ERP is an investment, not a cost

4 4 Business Transformation ERP implementation is about making changes for business transformation –Defining the core business requirements –Identifying available best business practices –Applying best business practices to make end-to- end business processes more effective and efficient –Using data warehousing for improved business intelligence

5 5 Business Transformation Post-ERP implementation is about business transformation providing opportunities –Return on investment –Improved utilization and allocation of resources –Continuous improvement of business processes

6 6 Return on Investment Procurement initiatives –Enterprise-wide procurement results are visible and accessible in data warehouse and enable: –Maximizing existing enterprise procurement contracts Identify off-contract procurement Enforce use of existing enterprise procurement contracts –Strategic sourcing Leverage purchasing power of enterprise with strategic vendors Significant volume discounts

7 7 Return on Investment Procurement initiatives –Just-in-time inventory Strategic contract with one supply vendor Supplies delivered directly to agencies Maintenance of inventory remains with vendors State operated supply warehouses can be closed

8 8 Return on Investment Improving cash management –Earlier recognition of revenues –Match current revenues with current accounts payables –Longer term investments

9 9 Return on Investment Decommissioning of agency program and shadow systems –Current ERP functionality-meets or exceeds existing agency system requirements –New ERP functionality-meets delta between ERP system functionality and agency system requirements

10 10 Improved Utilization, Allocation of Resources Shared service centers –Procurement Strategic sourcing Complex commodity/service procurements –On-line auctioning, RFPs, IFBs, etc. –Human Resources Call center/help desk –System technical support –Employee self-service Day to day personnel transactions –New hires, transfers, retirements, benefits

11 11 Improved Utilization, Allocation of Resources Organizations aligned with functionality –Finance Accounts payable –Single point of contact for vendors and disbursement agency Federal accounting and reporting –Payroll and travel management Single point of contact for employee payments

12 12 Improved Utilization, Allocation of Resources High level restructuring of government –Service functions (fleet management) –Constituent regulation (licensing, permitting, certification, insurance) –Cross-agency functions (laboratories, inspection, enforcement)

13 13 Business Process Continuous Improvement Strive for Faster Production of Financial Reports-Budgetary/GAAP Basis –Consider additional system validations/edits for data capture and integrity –Reassess structure and analytical use of data warehouse –Evaluate relationship with internal/external auditors-Business Partnership

14 14 Business Process Continuous Improvement Streamline Audit Approach/Methodology –Increased dependence upon system-Audit system, not around system Effective system validations/edits Improved user security Better and more timely data Consolidation of enterprise wide historical data

15 15 Business Process Continuous Improvement Streamline Audit Approach/Methodology –Collaboration between/among separate audit organizations Reliance on other audit organizations work papers Elimination of duplicate audit activities –More meaningful audits Focus on high value/high risk transactions Establish business partnership with audit organizations –Support for continuous business process improvement

16 16 Business Process Continuous Improvement Review of Policies/Procedures in Relation to ERP System –Administrative or statutory based –Focus on elimination of customizations/modifications of initial ERP implementation –On-going reengineering of business processes

17 17 Business Process Continuous Improvement Consideration for ERP Functionality Beyond Original Scope –Add-on to existing functionality –New functionality for additional business processes

18 18 Enabling Value William Greer Director, State and Local Government SAP Americas

19 19 The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled … people must again learn to work, instead of living on public assistance … Marcus Tullius Cicero ( B.C.) Roman Statesman & Philosopher

20 20 Aid & Development Retail Services Constituent & Gov Services Tax & Revenue Management Public Utilities Banking ServicesHealth Bio-Medical Response Incident Response (HLS) Public Security Education TransportationJustice Environment, Health & Safety Public Administration & Management

21 21 Public ROI = Public Value Operational ROI : Financial cost / benefit analysis Social ROI: Impact of IT on society and quality of life Political ROI : the impact of IT to policies, legislation

22 22 What Enables Public Value? Optimized Flexible Responsive

23 23 Optimized Public Administration Unified core solutions and shared services

24 24 Responsive Line of Business Solutions Fulfill specific agency and program requirements Tax & Revenue Social Services Public Security Incident Management Education Health Public Utilities Transportation Government & Constituent Svcs

25 25 A Business Process Platform An enterprise system should really support the whole enterprise The benefit of a platform Adaptability and scalability

26 26 Value – Where We Are Finding It Harvey Eckert Commonwealth Comptroller, Commonwealth of Pennsylvania

27 27 ERP Implementation Recap 07/02 – Wave 1 agencies* 10/02 – Wave 2 agencies* 01/03 – Wave 3A agencies* 07/03 – Wave 3B agencies* 01/04 – HR/Payroll 07/04 – PA DOT* * Finance, Budget, Procurement, and BW

28 28 Post ERP Implementation Projects Accounting Initiatives Procurement Initiatives Implemented new Travel Planning software Plant Maintenance in PA Department of Transportation PA Liquor Control Board Retail ERP

29 29 Accounting Initiatives Preparation of a more timely CAFR Reengineering Requisition to Check Implementing Revenue in SAP

30 30 Preparation of a more timely CAFR Where we were: –02 CAFR issued by 12/31/02 –03 CAFR issued by 5/31/04 –04 CAFR issued by 3/31/05 Where we are: –05 CAFR issued by 12/31/05 –06 CAFR issued by 12/31/06 Where we are going: –07 CAFR issued by 11/30/07 (5.0 mos.)

31 31 Preparation of a more timely CAFR (contd) Expedite the CAFR production and Audit Process – Top Down Approach - Whats material? – Focus on Opinion Units, significant funds – Use variance analysis approach – Use estimates – Use Entity Wide entries – Promote Timelier Component Unit Audits Improve coordination and communication with the Auditors

32 32 Reengineering Requisition to Check Make recommendations to improve standardization, workload and cycle time and align the Commonwealth with industry best practices. Recommendations will cover agencies, Comptroller Offices, and Treasury. Includes the payment process for Procurement, Utilities, and Grants

33 33 Requisition to Check Deliverables Recommend options for process improvement. Currently working on recommended quick hits. Delineate organizational roles and responsibilities Guidelines for processes and procedures Identification of policies and statutes to update Recommend changes to SAP configuration

34 34 Implementing Revenue in SAP Replacement of 25+ year paper-based legacy system (out-of scope during original ERP implementation) Redundant entry of same data into multiple systems Delays in recording revenue when significant funds are now electronically transferred Complicated reconciliation process due to timing differences and data entry errors in multiple systems

35 35 Improving Revenue Reporting Utilize SAP for reporting all Commonwealth revenue data Decommission various legacy systems Eliminate duplicate data entry by utilizing file transfer Eliminate/reduce paper documents Utilize consistent number ranges to track documents/records

36 36 Procurement Initiatives Implementation of SRM Strategic Sourcing Just-In-Time Inventory Shared Service Centers

37 37 Implementing the Supplier Relationship Management Module Purpose of SRM: –Automated Purchase Order from a shopping cart (Implemented 8/31/06) –Contract automation of bidding process and auction functionality (Sch. 3/15/07) –Streamline and standardize workflow

38 38 Implementing the Supplier Relationship Management Module Increase utilization of catalogs/punch out (Some were implemented 8/31/06) Implement vendor self-registration Electronic transmission of Purchase order and Invoice using supplier self-service or XML

39 39 Strategic Sourcing Consolidation of PAs buying power for goods and services at reduced rates Twenty-five commodities/services sourced to date Procurement savings from sourcing is $180 Million Provides opportunity to direct more resources to programs that benefit citizens without raising taxes

40 40 Just-In-Time Inventory Office supplies purchased when needed, not stored in bulk Office supplies delivered directly to state offices by supplier Thirteen supply warehouses closed Savings from the closing of the warehouses was $4 Million Forty warehouse employees were reallocated to other state jobs

41 41 Shared Service Center Department of General Services established a shared service center for procurement of goods and services Shared service center staffed with buyers or purchasing agents from state agencies Provides collaboration among agencies in the purchase of similar goods and services

42 42 Shared Service Center Buyers specialize in a specific industry and use that knowledge to get better pricing and better products Reduces administration burden on agencies for procurement activities such as analyzing historical data, developing RFPs and RFQs and negotiating contracts

43 43 Implemented Travel Planning software Amadeus Travel Planning Software Internet Web based software was implemented October 2, 2006 Travel plans synchronized into SAP Commonwealth receives commission from hotels for on-line bookings Expanded flight selection options

44 44 Implemented Travel Planning Software User-friendly interface that looks and feels like commercial web sites Flexible, one-stop online booking Low nightly rate for hotels Hotel searches by price or proximity to location Reporting capabilities – each agency has license to reporting tool

45 45 Plant Maintenance in PA Dept of Transportation Major Project to integrate PA DOT maintenance management business into the Commonwealths ERP environment (sch. 7/9/2007) –11 Engineering Districts –58 maintenance organizations in 67 counties –Annual budget > $1 Billion Improve the business processes of the highway, fleet, and materials management, and sign inventory and ordering processes Federally mandated requirements

46 46 PA Liquor Control Board Retail ERP System Issued RFP for software vendor and integrator to implement a Retail ERP System Replace antiquated Financial Systems with ERP Solution Reengineering of the Business Process (Started this with some quick hits)

47 47 Questions

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