Presentation of CHORUS Jacques MARZIN November 16

2 CONTENTS  Presentation of AIFE  Chorus - context and key issues  Project scope, stakeholders and direction  Best practices and pitfalls  Conclusion

3 Presentation of AIFE AIFE and SIFE  AIFE (Agency for State Financial Information Technology) counts 200 employees and is a national authority service (SCN) attached to the French Ministry of Budget, Public Accounts and Civil Administration  AIFE defines and implements the State's financial IT strategy  Construction, development and rollout of the French Government financial management application, Chorus, for 50,000 users (25, ,000)  Architecture of SIFE (State Financial Information System): streamlines all State financial applications into a global strategy of evolution  The maturity level reached by the Quality Management System (SMQ) has enabled AIFE to obtain ISO 9001 certification in 2008 for all of its activity

4 CONTENTS  Presentation of AIFE  Chorus - context and key issues  Project scope, stakeholders and direction  Best practices and pitfalls  Conclusion

5 Chorus - context Organization of French Administration CENTRAL LOCAL 16 REGIONAL DEPARTMENTAL MUNICIPAL Ministries Regional Council General Council Municipal Council State Administration Territorial Administration Hospital Administration *Sum of payment appropriations voted for the general budget + ancillary budgets

6 Key issues AugustSeptemberJuly Process reengineering Modernization audits RGPP* Implementation of reforms in financial information systems Decisive State reforms Main objectives of reforms State financial information systems reform Adopt a performance- oriented approach instead of a resource- oriented approach Make Government stakeholders more accountable in exchange for more freedom Promote the transparency of Public Service management Implement LOLF innovations in management processes: Modify existing processes Define stakeholders' new roles and responsibilities Improve the organization and actions of State services Simplify processes Assess assignments and administrative resources Evaluate the effectiveness of public policies Define the State's scope of intervention: Adapt public policies to the needs of French citizens Promote the human potential in French administration Identify operating latitude for funding priorities CHORUS Publication of LOLF LOLF phase / agreement January Implementation of LOLF* X 2011 Key issues …… via the reforms to State financial activity *LOLF (Organic law relative to financial laws) RGPP (General Revision of Public Policies)

7 Implement all LOLF's provisions and requirements Improve Public Service management steering Strengthen the traceability and auditability of State financial data Simplify financial processes Key issues Objectives of Chorus for improved Public Service management performance and transparency Three-dimensional accounting Management structures: Prog, BOP (program working budget), UO (operational unit) Monitor property assets Fungibility Performance Three-dimensional accounting Management structures: Prog, BOP (program working budget), UO (operational unit) Monitor property assets Fungibility Performance A single tool for all stakeholders Standardized accounting and budget processes Global direction and strategy Monitor global and budget processes A single tool for all stakeholders Standardized accounting and budget processes Global direction and strategy Monitor global and budget processes Trace management events to accounting data Trace accounting data to management events Accounts must be auditable: all provisions in place to ensure the reliable control of accounting entries Ensure the security and integrity of data and financial processes Trace management events to accounting data Trace accounting data to management events Accounts must be auditable: all provisions in place to ensure the reliable control of accounting entries Ensure the security and integrity of data and financial processes Standardized processes using best practices from private and public sectors Integrate research on the reengineering of budget and accounting processes Simplify supplier relationship (portal) Standardized processes using best practices from private and public sectors Integrate research on the reengineering of budget and accounting processes Simplify supplier relationship (portal)

8 Choice of an ERP system Integrated system Consolidated frameworks (customers, suppliers, chart of accounts, etc.) Seamless process management (procurement, suppliers, etc.) Use predefined management rules to interpret all accounting entries Implement a standardized workflow among the different stakeholders Real-time system Data posted is immediately available to authorized users Data posted immediately updates accounting and budget items using predefined and integrated management rules Reliability and security No duplicates posted, ensuring no time loss and improved data consistency Certain automatic processes (e.g. allocations or transfers) Confidentiality ensured: - Authorization management - Chorus access controlled using strong authentication User-friendliness Windows interface (portal, buttons, icons, drop-down menus, etc.)

9 CONTENTS  Presentation of AIFE  Chorus - context and key issues  Project scope, stakeholders and direction  Best practices and pitfalls  Conclusion

10 Application context Map of SIFE Approx. 320 applications altogether

11 Chorus scope Chorus within SIFE SIFE Chorus Allocation and provision of resources Cross- organizational steering Budget Accounting Non-tax revenuesGeneral Accounting Cost analysis accounting Inventory management Expenditure excluding payroll and foreign expenditure Asset management Farandole Elaboration of the Finance bill Banque de France Payments (banking channel) ONPFrance TrésorCoregeCopernic PayrollTax revenues Debt management Foreign expenditure Overall picture of the main SIFE applications targeted

12 AIFE Delegated project owner Project Management Organisation Chorus Over 2,000 stakeholders * DB – Budget Department, DGFiP – Public Finances General Department, DGME – State Modernization General Department, SPM – Prime Minister Services, PMA – Project management assistance PMA* Project owner users Convergence of needs Home Affairs Ecology and Transport Defence Justice Economy Finance and Industry Higher Education Foreign Affairs Budget and Public Accounts Regulatory project owners DB*DGFIP*DGME* Education Work, Employment Health City Solidarity Sports Culture and Communication Public Service + Court of Auditors Rollout SPM* Agriculture Software publishers Integrators Balanced solution Batch 1 Interministerial coordination Batch 4 Training and getting started Batch 3 Technical connection Batch 2 Operational rollout assistance Maintenance

13 Functional version deployed Version 3 4 prog. Version RE Version 4 Version 2 Version 6 Procurement request and procurement card Expenses without prior authorization Invoicing department Specific management of non-tax revenues Complex property assets and inventory SEPA, foreign, overseas payments Special accounts (in part) Forms extended to all deployed ministries Defence, Justice, Education, Higher Education, Home Affairs, Agriculture, Ecology, Budget, Economy Defence, Higher Education, Budget (only at central site) Budget, Home Affairs, Agriculture, Ecology, Housing, Justice, DGFiP/DB All ministries (including DGFiP), excluding Defence Chorus - schedule and phases Education, DGFiP/DB July 2009 March 2009 January 2010 Organizational scope Interface with interministerial business applications Interface with interministerial applications (DGFiP, DB, etc.) Implementation of the Chorus data centre (Business Intelligence) IMPLEMENTATION OF RGPP (General Revision of Public Policies) Defence and operators October 2009 Dematerialization implemented in Chorus Phase V2 (industrial pilot) Phase V2-RE (TGPE* and STGPE* replaced) Phase V3Phase V3-RE Phase V4 FTE management Functional modifications State procurement (SRM module) Non-tax revenues Tangible, intangible and financial assets First data centres (BI module) Property assets (RE-FX module) January 2009 Tests run on forms Tests run on Invoicing department 9 prog.3 prog.29 prog.9 prog.133 prog. Rollout of RE-FX for Defence Ministry and State operators, by integrating improvements from version 3 Key: Main changes between two versions deployed Number of budget programs concerned by phase (if applicable) x prog. Start of phase 100 users 500 users users users 50 users users users users New Chorus core users Approx. 11,000 users users users New Chorus Form users Phase V1 (functional pilot) Version 1 July 2008 June 2010 Phase V5 Start 2011 Phase V6 Home Affairs, Agriculture, Ecology, Culture, MEN (Education), MESR (Higher Education), Budget, DGFiP/DB All ministries, DGFiP/DB Version users DGFIP (accountants) Accounting Start 2012 * TGPE - State Properties General Table), STGPE - State Properties General Table Server

14 Chorus implementation Change management must take into account all components in the State financial reform Organizations Mindset and business Tools and infrastructure Processes Change management Change factors Areas of change AIFE scope Objectives of AIFE change management: provide ministries with a global framework, methodology, tools and support during the project life cycle State financial reform components LOLF - regulatory aspects Modernization of budget and accounts Possible developments in budget structure RGPP - General Revision of Public Policies CHORUS Indicators

15 Simplified access via Chorus Forms to optimize the number of users Shared Services Centre Referrers Referrers Chorus Procurement request Grant request Confirmation of Service Provided EJ* SF* createscertifies New V6 forms Chorus Forms Users in referrer departments can issue requests via the Forms portal * EJ - legal commitment, SF - service provided

16 Supplier invoices  Perspectives 10,000 electronic invoices to be exchanged between ministries and suppliers in 2011 PJ (Procurement supporting document)  Perspectives Since January 2010, exchange of initial supporting documents from the Place de March é Interminist é rielle (State procurement marketplace) to Chorus as attachments to legal commitments Statement of expenses  Implementation The French Education Ministry (MEN) was the first to dematerialize statements of expenses in July 2009 (V3). Since V4, there has been increased transactions with Mindef (Defence), MIOMCT (Home Affairs), MEIE (Economy), MAAP (Agriculture)/MEEDDM (Ecology). In V6, MEIE (Economy), MAEE (Foreign Affairs), Minfin (Finance) embraced dematerialization.  Perspectives Interministerial DT, continued connection of AMM EF. Procurement cardManagement account Production  Implementation Since V4, deployed in Mindef. In V6, used by the Finance Ministry and DGFIP.  Perspectives 24,000 bank transaction statements to be transferred from the issuing bank to the relevant ministries. This involves a total of 36 GB of data. Production Trial in 2011 Grants Production  Implementation Chorus Forms has been using this solution since January  Perspectives Connection of MEEDDM (Ecology) to the grant flow.  Implementation Since mid 2010, management accounts have been electronically transferred to the Court of Auditors. Chorus dematerialization: implementation

17 Work-in-progress 2010 fiscal year (over 1 year; V4) PJ (Procurement supporting documents) Procurement card/bank transaction statements Grants supporting documents Statements of expenses 200 flows of PJ sent from PMI to Chorus 500 dematerialized bank transaction statements integrated 25,000 grants created via Chorus Forms 1,150,000 payment requests created in Chorus for statements of expenses Forms Initial assessment Deployment level of dematerialization Invoices exchanged in the trial phase between UGAP (Union for Grouping of Public Purchases), France Telecom/Orange and the ministries in the trial (MINDAC) June 2011 (over 6 months) 400 flows sent to Chorus, i.e. 200 procurement contracts 750 dematerialized bank transaction statements integrated 800,000 payment requests created in Chorus for statements of expenses 45,000 grant supporting documents created via Chorus Forms Reminder of 2010 objectives 2,100,000 statements of expenses 100,000 grants in ,000 bank transaction statements in ,200 new procurement contracts in 2010 INVOICES

18 Chorus converts management events into general accounting data, budget accounting data and cost analysis accounting data without requiring repeated data entry:  Events entered in Chorus involve the three types of accounting  Data entered in the three types of accounting is managed automatically  Accounting entries are centralized automatically and in real-time Legal commitment Payment request Payment release Banque de France response Service provided AE (commitment authorization) used Expense booked (or non-received invoice if applicable) Trade payables booked CP (payment appropriation) used Payment release entry booked Cash entry booked Impact on CAC (cost analysis accounting) Possible impact on CAC Budget accounting General accounting Cost analysis accounting Invoice received Accounting in Chorus

19 CONTENTS  Presentation of AIFE  Chorus - context and key issues  Project scope, stakeholders and direction  Best practices and pitfalls  Conclusion

20 Important constraints and limits of an ERP system  ERP is ergonomically designed... but certainly not intuitive  As such, we must focus strongly on training  Even if user training is carried out correctly, the learning phase is important and should not be neglected  Despite being "integrated tools", the user-friendliness of modules vary largely according to their age and version  We should not adapt ERP to our processes; we should adapt our processes to ERP  Example in Chorus: the complementary period has been discontinued  An ERP system generally does not interface well with external software applications or legacy business tools

21 Best practices for implementing ERP  Undertake process and organizational reengineering before or at the start of the project  Manage the project by prioritizing the time axis, before cost or quality  Work in mutual agreement  And most of all, avoid using any specific development with an ERP like SAP, even when proposed by SAP themselves!

22 CONTENTS  Presentation of AIFE  Chorus - context and key issues  Project scope, stakeholders and direction  Best practices and pitfalls  Conclusion

23 Chorus Costs  Forecast of overall cost: € 1.1 billion over 10 years (5 years of investment and 5 years of operation)  Estimate given by the Inspectorate-General of Finances in 2006  Estimate is consistent with the Court of Auditors' figures presented to the French National Assembly  Reality: € 1.05 billion over 10 years  Overall cost includes:  Investment expenses  Operating expenses  Operating expenses are mostly offset by savings from the streamlining of the State's financial applications

24 Conclusion  Chorus is the key to the State's effort to modernize both budget and accounts  Chorus is the first step in streamlining the SIFE (State Financial Information System)  Organizational issues have been highlighted by the Return on Investment audit (e.g. back office changes, shared services, etc.)  Chorus is an opportunity for RGPP (General Revision of Public Policies)  In simplifying processes and in sustaining effective organizational models without constraints (a single system for all stakeholders)  The implementation of an ERP must improve public management steering and reinforce the traceability and auditability of State financial data

25 25,000 Chorus core users, including 09,500 users every day 25,000 Chorus Form users, including 04,500 Form users every day Chorus - key figures 18 project owners 3,200 man years to complete Chorus (excluding ministries) All State accounting data from central and local services centralized within a global budget of approximately €380 billion 600,000 student grants paid each month Approximately 45 metric tons of hardware for technical architecture platforms An application ecosystem with 250 ministerial applications and 70 interministerial applications €   45 t.   28% of the investment budget for training €