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Donald E. Edmiston Senior Government Advisor, BearingPoint

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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, BearingPoint William Greer Director, State and Local Government, SAP Harvey C. Eckert Commonwealth Comptroller, Commonwealth of Pennsylvania

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

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

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

18 William Greer Director, State and Local Government SAP Americas
Enabling Value William 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 & Philosopher First, 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 public Improve the quality of life for our citizens Provide quality services as required by law or mandated by the public, to enhance the health, safety and general well-being of the citizens Promote sustainable development through protection of the environment and heritage, infrastructure provision, and balanced economic development Actually achieving these goals of course has always been challenging.

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

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 The 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 Administration Public Sector Processes Optimized Responsive Flexible

23 Optimized Public Administration Unified core solutions and shared services
Public Sector Processes Public Administration IVN

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

25 A Business Process Platform
Public Sector Processes An “enterprise” system should really support the whole “enterprise” The benefit of a platform Adaptability and scalability Public Administration

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

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 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 Accounting Initiatives
Preparation of a more timely CAFR Reengineering Requisition to Check Implementing 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 3/31/05 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.) Note: ’03 CAFR issued by 5/31/04 GASB 34 Implementation SAP implementation – Procurement, Budget and Finance ’04 CAFR issued by 3/31/05 SAP implementation – HR and Payroll Received 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 funds Use variance analysis approach Use estimates Use Entity Wide entries Promote Timelier Component Unit Audits Improve 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 responsibilities Guidelines for processes and procedures Identification of policies and statutes to update Recommend 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 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 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 Procurement Initiatives
Implementation of SRM Strategic Sourcing Just-In-Time Inventory Shared 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 workflow Once the shopping cart is approved, it will automatically create a purchase order that will electronically be sent to the vendor On-line bidding and reverse auction capabilities. Much like bidding on E-bay except you are looking for the lowest price bidder. Workflow of the shopping carts and purchase orders will be consistently applied by automatically 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-registration Electronic transmission of Purchase order and Invoice using supplier self-service or XML Make purchasing routine type commodities simple by the use of catalogs established internally or by being able to go out to a vendor’s website and prepare a shopping cart that will link back 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 portal to enter invoices or we can receive it electronically using XML

39 Strategic Sourcing Consolidation of PA’s 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 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 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 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 RFP’s and RFQ’s and negotiating contracts

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 The 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 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 User 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 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 Integrator (Bearing Point) under contract. Project Prep started February 2006 Projected GO-LIVE July 2007

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 Questions

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