Presentation on theme: "Donald E. Edmiston Senior Government Advisor, BearingPoint"— Presentation transcript:
1 Realizing Additional Value from ERP Systems: Beyond Initial Implementation Donald E. Edmiston Senior Government Advisor, BearingPointWilliam Greer Director, State and Local Government, SAPHarvey C. Eckert Commonwealth Comptroller, Commonwealth of Pennsylvania
2 Donald E. Edmiston Senior Government Advisor, BearingPoint Value - Where To LookDonald E. Edmiston Senior Government Advisor, BearingPoint
3 Enterprise Resource Planning ERP is an enterprise-wide project that involves the redesign of business processesERP is a business transformation effort, not a technological projectERP is an investment, not a cost
4 Business Transformation ERP implementation is about making changes for business transformationDefining the core business requirementsIdentifying available best business practicesApplying best business practices to make end-to-end business processes more effective and efficientUsing data warehousing for improved business intelligence
5 Business Transformation Post-ERP implementation is about business transformation providing opportunitiesReturn on investmentImproved utilization and allocation of resourcesContinuous improvement of business processes
6 Return on Investment Procurement initiatives Enterprise-wide procurement results are visible and accessible in data warehouse and enable:Maximizing existing enterprise procurement contractsIdentify off-contract procurementEnforce use of existing enterprise procurement contractsStrategic sourcingLeverage purchasing power of enterprise withstrategic vendorsSignificant volume discounts
7 Return on Investment Procurement initiatives Just-in-time inventory Strategic contract with one supply vendorSupplies delivered directly to agenciesMaintenance of inventory remains with vendorsState operated supply warehouses can be closed
8 Return on Investment Improving cash management Earlier recognition of revenuesMatch current revenues with current accounts payablesLonger term investments
9 Return on InvestmentDecommissioning of agency program and shadow systemsCurrent ERP functionality-meets or exceeds existing agency system requirementsNew ERP functionality-meets delta between ERP system functionality and agency system requirements
10 Improved Utilization, Allocation of Resources Shared service centersProcurementStrategic sourcingComplex commodity/service procurementsOn-line auctioning, RFPs, IFBs, etc.Human ResourcesCall center/help deskSystem technical supportEmployee self-serviceDay to day personnel transactionsNew hires, transfers, retirements, benefits
11 Improved Utilization, Allocation of Resources Organizations aligned with functionalityFinanceAccounts payableSingle point of contact for vendors and disbursement agencyFederal accounting and reportingPayroll and travel managementSingle point of contact for employee payments
12 Improved Utilization, Allocation of Resources High level restructuring of governmentService functions (fleet management)Constituent regulation (licensing, permitting, certification, insurance)Cross-agency functions (laboratories, inspection, enforcement)
13 Business Process Continuous Improvement Strive for Faster Production of Financial Reports-Budgetary/GAAP BasisConsider additional system validations/edits for data capture and integrityReassess structure and analytical use of data warehouseEvaluate relationship with internal/external auditors-”Business Partnership”
14 Business Process Continuous Improvement Streamline Audit Approach/MethodologyIncreased dependence upon system-”Audit system, not around system”Effective system validations/editsImproved user securityBetter and more timely dataConsolidation of enterprise wide historical data
15 Business Process Continuous Improvement Streamline Audit Approach/MethodologyCollaboration between/among separate audit organizationsReliance on other audit organizations work papersElimination of duplicate audit activitiesMore meaningful auditsFocus on high value/high risk transactionsEstablish “business partnership” with audit organizationsSupport for continuous businessprocess improvement
16 Business Process Continuous Improvement Review of Policies/Procedures in Relation to ERP SystemAdministrative or statutory basedFocus on elimination of customizations/modifications of initial ERP implementationOn-going reengineering of business processes
17 Business Process Continuous Improvement Consideration for ERP Functionality Beyond Original ScopeAdd-on to existing functionalityNew functionality for additional business processes
18 William Greer Director, State and Local Government SAP Americas Enabling ValueWilliam Greer Director, State and Local Government SAP Americas
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 & PhilosopherFirst, let‘s define what the goals of government are. This quote from a prominent government official, captures the essence of that – balancing the budget, helping people find work, providing public stewardship.[CLICK MOUSE]What‘s notable about this quote is that it‘s centuries old. The goals of government have been consistent for centuries and will continue into the future. If you look at almost any government mission statement, anywhere in the world, you‘ll see essentially the same goals and purpose.Some examples from the Web:Provide for the welfare of the publicImprove the quality of life for our citizensProvide quality services as required by law or mandated by the public, to enhance the health, safety and general well-being of the citizensPromote sustainable development through protection of the environment and heritage, infrastructure provision, and balanced economic developmentActually achieving these goals of course has always been challenging.
21 Public ROI = Public Value Operational ROI : Financial cost / benefit analysisSocial ROI: Impact of IT on society and quality of lifePolitical ROI : the impact of IT to policies, legislationThe Public ROI Framework is literally a new assessment model to help government measure multiple dimensions of ROI from their IT investments. These measurements correspond to the varied stakeholders in government – including internal and external. We’ve called this project “Public ROI”, which incorporates three components: social, political and operational ROI. We highlight what these measure, and cite examples, on this slide.Our goal is to help our customers get to the upper right corner of the previous slide, where maximum public value is achieved and governments can achieve collaborative, cost-based outcomes and have the information to understand the cost basis from delivering service from not only one agency (say social service), but also from another (say tax) agency within the same government enterprise. Not only does SAP have the solutions to get our customers to this space, but we created a measurement model to help them determine the true value of their IT investments.Governments want to measure IT performance as a means to build public trust and maximize public value. It’s essentially asking the question “what’s the value and priority tradeoff?This new framework helps governments assess value and priority on various IT investments and programs. Responsiveness to social and political issues is just as important in government today as efficiency or effective resource optimization. It’s no longer good enough to just be internally efficient. Citizens expect government to clearly understand the broader social, political and operational returns of its investments and prioritize accordingly.[Speaker note – Pick up a local newspaper to highlight this point on how governments are justifying various programs and IT investment – such as beautification programs for parks, social programs, etc. How do governments make decisions on these topics? How do they move forward? This new framework can help guide their decision]
22 What Enables Public Value? Public AdministrationPublic Sector ProcessesOptimizedResponsiveFlexible
23 Optimized Public Administration Unified core solutions and shared services Public Sector ProcessesPublic AdministrationIVN
24 Responsive Line of Business Solutions Fulfill specific agency and program requirements Public Sector ProcessesPublic Sector ProcessesTax & RevenueSocial ServicesPublic SecurityIncident ManagementEducationHealthPublic UtilitiesTransportationGovernment & Constituent SvcsPublic AdministrationIVN
25 A Business Process Platform Public Sector ProcessesAn “enterprise” system should really support the whole “enterprise”The benefit of a platformAdaptability and scalabilityPublic Administration
26 Value – Where We Are Finding It Harvey Eckert Commonwealth Comptroller, Commonwealth of Pennsylvania
28 Post ERP Implementation Projects Accounting InitiativesProcurement InitiativesImplemented new Travel Planning softwarePlant Maintenance in PA Department of TransportationPA Liquor Control Board Retail ERP
29 Accounting Initiatives Preparation of a more timely CAFRReengineering Requisition to CheckImplementing Revenue in SAP
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 3/31/05Where we are:’05 CAFR issued by 12/31/05’06 CAFR issued by 12/31/06Where we are going:’07 CAFR issued by 11/30/07 (5.0 mos.)Note:’03 CAFR issued by 5/31/04GASB 34 ImplementationSAP implementation – Procurement, Budget and Finance’04 CAFR issued by 3/31/05SAP implementation – HR and PayrollReceived Certificate of Achievement every year!
31 Preparation of a more timely CAFR (cont’d) Expedite the CAFR production and Audit Process“Top Down” Approach - What’s material?Focus on Opinion Units, significant fundsUse variance analysis approachUse estimatesUse Entity Wide entriesPromote Timelier Component Unit AuditsImprove coordination and communication with the Auditors“Top Down” approach recognizes auditor’s report on “opinion units” rather than funds, addresses major funds and aggregate remaining funds (ARF), and opinions based on materiality. The approach analyzed the 122 funds that made up the ARF and found that 22 funds made up 95% of assets, liabilities, fund bal, revenues and expenditures of ARF. These funds were focus of our effort. For the General Fund, 17 of the 57 agencies supported the 95% threshold and were the focus of the General Fund effort.Variance Analyses were used to verify accuracy of account amounts and to weed out exceptions that required adjustment. Materiality limits, both in $$ and %’s, were set at limits for each major fund and for the ARFs based on the size of that opinion unit.Estimates were used for major receivables (taxes) and for estimable liabilities. Analysis of liabilities identified those liabilities that were estimable (major liabilities, such as medical assistance, are based on actuarial valuations) and involved the establishment of a Comfort Level as to accuracy of estimate. Lookback process in September offered an opportunity to refine the estimate, if needed, and to improve the process for next year.Entity-wide entries were enabled by SAP. Reports were developed to extract from SAP the information needed to develop the entry. SAP enabled the uploading of entity wide entries to the finance module, eliminating the need to manually post the entries to the system.Better Communication meant less surprises and more teamwork toward the common goal of a quicker CAFR. On site location of auditors provided day-to-day contact. Biweekly teleconferences and monthly management committee meetings were opportunities to address critical issues and monitor progress. A 3-day turnaround on auditor documentation requests kept the audit process moving.
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 Requisition to Check Deliverables Recommend options for process improvement. Currently working on recommended quick hits.Delineate organizational roles and responsibilitiesGuidelines for processes and proceduresIdentification of policies and statutes to updateRecommend changes to SAP configuration Quick hits:(1) Expansion of ACH and providing electronic remittance information.(2) Improvement in the timeliness of the entry of Goods Receipts(3) Use of workflow of imaged invoices and providing imaged invoices to Treasury (4) Cleansing of Vendor Master File.
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 systemsDelays in recording revenue when significant funds are now electronically transferredComplicated reconciliation process due to timing differences and data entry errors in multiple systems
35 Improving Revenue Reporting Utilize SAP for reporting all Commonwealth revenue dataDecommission various legacy systemsEliminate duplicate data entry by utilizing file transferEliminate/reduce paper documentsUtilize consistent number ranges to track documents/records
36 Procurement Initiatives Implementation of SRMStrategic SourcingJust-In-Time InventoryShared Service Centers
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 workflowOnce the shopping cart is approved, it will automatically create a purchase order that willelectronically be sent to the vendorOn-line bidding and reverse auction capabilities. Much like bidding on E-bay except you are lookingfor the lowest price bidder.Workflow of the shopping carts and purchase orders will be consistently applied byautomatically workflowing to the appropriate approvers.
38 Implementing the Supplier Relationship Management Module Increase utilization of catalogs/punch out (Some were implemented 8/31/06)Implement vendor self-registrationElectronic transmission of Purchase order and Invoice using supplier self-service or XMLMake purchasing routine type commodities simple by the use of catalogs established internallyor by being able to go out to a vendor’s website and prepare a shopping cart that will linkback to the Commonwealth.Create the process for vendors to register on-line.Instead of sending paper purchase orders/invoices, we will either have a vendor use our portalto enter invoices or we can receive it electronically using XML
39 Strategic SourcingConsolidation of PA’s buying power for goods and services at reduced ratesTwenty-five commodities/services sourced to dateProcurement savings from sourcing is $180 MillionProvides opportunity to direct more resources to programs that benefit citizens without raising taxes
40 Just-In-Time Inventory Office supplies purchased when needed, not stored in bulkOffice supplies delivered directly to state offices by supplierThirteen supply warehouses closedSavings from the closing of the warehouses was $4 MillionForty warehouse employees were reallocated to other state jobs
41 Shared Service CenterDepartment of General Services established a shared service center for procurement of goods and servicesShared service center staffed with buyers or purchasing agents from state agenciesProvides collaboration among agencies in the purchase of similar goods and services
42 Shared Service CenterBuyers specialize in a specific industry and use that knowledge to get better pricing and better productsReduces administration burden on agencies for procurement activities such as analyzing historical data, developing RFP’s and RFQ’s and negotiating contracts
43 Implemented Travel Planning software Amadeus Travel Planning SoftwareInternet Web based software was implemented October 2, 2006Travel plans synchronized into SAPCommonwealth receives commission from hotels for on-line bookingsExpanded flight selection optionsThe project was implemented October 6, 2006.The AMADEUS product is accessible from any Internet-capable PC.Expenses are pre-populated when travelers enter Travel Expense Module to claim reimbursement.Commonwealth is planning to provide hands-on training (train the trainer) to Subject Matter Experts in each agency.Most current commissions from hotels are 5-10 percent.On some bookings, travelers can choose from over 100 flight options.
44 Implemented Travel Planning Software User-friendly interface that looks and feels like commercial web sitesFlexible, one-stop online bookingLow nightly rate for hotelsHotel searches by price or proximity to locationReporting capabilities – each agency has license to reporting toolUser friendly software, which should increase adoption rates dramatically.Travelers can book flight, hotel, and car rental from one site.Travelers can choose strictly by price, if they wish.They can also search by a street address and see which hotels are the closest to the worksite.The Commonwealth will receive one license per agency plus about 10 additional for heavy users.
45 Plant Maintenance in PA Dept of Transportation Major Project to integrate PA DOT maintenance management business into the Commonwealth’s ERP environment (sch. 7/9/2007)11 Engineering Districts58 maintenance organizations in 67 countiesAnnual budget > $1 BillionImprove the business processes of the highway, fleet, and materials management, and sign inventory and ordering processesFederally mandated requirementsIntegrator (Bearing Point) under contract.Project Prep started February 2006Projected GO-LIVE July 2007
46 PA Liquor Control Board Retail ERP System Issued RFP for software vendor and integrator to implement a Retail ERP SystemReplace antiquated Financial Systems with ERP SolutionReengineering of the Business Process (Started this with some quick hits)