Defining and Enabling World-Class Performance in Public Sector Hawaii V2.0

The Hackett Group Defines and Enables World-Class Performance The use of our intellectual capital enables our clients to implement change to affect their ability to attain and sustain world-class performance We provide strategic advice and implementation assistance based on 4,000 benchmarks with leading global companies Our implementation tools allow our clients to achieve results from proven best practices of world-class companies Our recommendations address both efficiency and effectiveness of world-class performance Our efforts have delivered over $90 billion in sustainable cost savings and $25 billion of improved cash flow improvement through REL, our working capital group for clients across the globe Operating in the Americas, Europe and Asia, we have served clients in 66 countries 3 Key Points: The Hackett Group uniquely defines World-Class performance in SGA related processes. We are a global Business Process Advisory Firm which uses actual performance metrics and best practices to provide research and advise to our clients Our mission is to empower executives like you to achieve world-class performance levels. Additional points as necessary: Hackett does not implement technology. We are not a systems integrator. We have offices through the United States, with our global headquarters in Atlanta. Additional major locations include the UK, Germany and India. Our unique intellectual capital is unparalleled in driving successful performance improvement

Hackett Insights Leverage Our Work with Over 2,700 of the World’s Leading Organizations and ….. 97% of the Dow Jones Industrials 73% of the Fortune 100 88% of the Dow Jones Global Titans 73% of the DAX 30 45% of the FTSE 100

…..Leading Government/Public Sector and Higher Ed Institutions through the Benchmarking Program Texas Utah Montana California Arizona Idaho Nevada Oregon Iowa Colorado Kansas Wyoming New Mexico Missouri Minnesota Nebraska Oklahoma South Dakota Washington Arkansas North Dakota Louisiana Illinois Ohio Florida Georgia Alabama Wisconsin Virginia Indiana Michigan Mississippi Kentucky Tennessee Pennsylvania North Carolina South West New Jersey Maine New York Vermont Maryland New Hampshire Connecticut Delaware Massachusetts Rhode Island H H H H H Alaska Hawaii Government/Public Sector H Higher Ed Institutions

The List of Participating Public Sector Organizations are Growing Function and Status C=complete, IP=in progress, P=pending   Finance HR Procurement IT State of TN C State of AZ State of Delaware State of CO Commonwealth of MA IP State of MS State of AK State of GA State of AL State of NJ State of OK State of OH State of WV State of MI UNC Chapel Hill UVA Ohio University* Yale University Georgia Board of Regents Nassau County, NY Miami-Dade County, FL King County, WA

There are Many, and Different, Reasons for Public Sector to Benchmark Compare Performance for Continuous Improvement - use of standard definitions, data collection and metrics to learn from other public sector organizations as well as World-Class organizations Baseline Measurement - Provides a baseline, supporting a “before and after” comparisons when undertaking an improvement project (such as a new ERP) Foundation for Business Case - Provides insight and data into areas that are performing well and into areas for improvement that will yield the highest ROI, and to prioritize best practices initiatives

Hackett Value Grid™ − The Foundation for How Hackett Defines World-Class Performance Hackett Value Grid™ (Finance example) EFFECTIVENESS Days sales outstanding Days payables outstanding Accounts payable rework rate Customer billing rework rate Accuracy of forecasts and analysis Functional role in strategic decision making Percent of time analytic focus in on proactive decision making Percent of time spent collecting and compiling data for analysis Percent of analysts with acumen to function as business partners EFFICIENCY Overall function cost as a % of revenue Process cost as a % of revenue Technology cost per function FTE Staffing levels by process Cycle times and iterations Unit cost of transactions Utilization of self-service for inquiry Application complexity Automation of transactions Reliance on spreadsheets Percent of business reports distributed electronically JUST A LITTLE MORE ON THIS UNIQUE MODEL WE USE ACUTAL PERFORMANCE METRICS AND ARRAY THOSE ON A RELATIVE BASIS TO PLACE FIRMS AS A REPRESENTITIVE DOT ON THIS TYPE OF SCATTER DIAGRAM THE PERFORMANCE METRICS INCLUDE SUCH THINGS AS ECONOMIC VALUE ADDED, QUALITY METRICS AND BUSINESS ALIGNMENT ON THE EFFECTIVENESS (OR Y AXIS) AND COSTS, HEADCOUNT AND CYCLE TIME METRICS ON THE EFFICIENCY (OR X AXIS) THIS METHODOLOGY IS IN ITSELF UNIQUE BUT THE REAL VALUE COMES FROM ANALYZING THE FIRMS THAT FALL INTO THAT UPPER RIGHT SECTOR AND DETERMININGWHAT IS REALLY MAKING THE DIFFERENCE IN THEIR PERFORMANCE. ORG / SYSTEMS/ PROCESSES ALTHOUGH NOT USED AS OFTEN, WE DO ALSO CUT A WC EFFICIENCY AND WC EFFECTIVENESS CUT (UPPER DECILE)

Hackett uses Actual Data to Identify World-Class Performers in Human Resources Hackett Value Grid™ (HR example) EFFECTIVENESS HR linkage to business strategy Sourcing utilization Workforce management alignment Quality metrics (HR transactions) Linkages between employee development and business strategy Percent internal promotions HR partnering on organizational issues HR Generalist allocation of time Use of organizational metrics in HR- managed projects Retention plans for key employees Termination rates Ratio of strategic workforce planning process costs to Total HR process costs Skills & education of HR staff EFFICIENCY Total HR cost per employee Total HR staffing Staffing levels by process Technology allocation Degree of application integration Process automation Automation of reports HR self-service utilization Resource allocation Integration of HR systems Productivity per FTE Days to fill positions Ratio of technology cost to transaction process labor cost Overall HR span of control Key Points We use actual data to define world-class performance Two dimensions: Efficiency and Effectiveness Hackett defines world-class as the top quartile performers in both efficiency and effectiveness metrics Where would you place yourself? Where would you place yourself?

Hackett uses Actual Data to Identify World-Class Performers in Procurement Hackett Value Grid™ (Procurement example) EFFECTIVENESS Economic return Supply base leverage & performance Role of procurement Process quality Information & analysis Examples: Spend cost reduction and avoidance savings as a percent of spend Percent of suppliers comprising the top 80% of spend On-time supplier delivery percentage Internal customer satisfaction ratings Percent of spend formally influenced by procurement Percent of transactions requiring post- issuance activity Ability to view detailed spend data on an enterprise-wide basis EFFICIENCY Process costs Productivity Cycle times Technology leverage Costs per transaction Staffing Levels Examples: Procurement process costs as a percent of spend Number of POs processed per FTE Receipt processing cycle time Percent of RFx’s submitted electronically Ratio of labor to technology cost Cost per PO FTEs per $1B of spend Key Points We use actual data to define world-class performance Two dimensions: Efficiency and Effectiveness Hackett defines world-class as the top quartile performers in both efficiency and effectiveness metrics Where would you place yourself? Where would you place yourself?

Our Benchmark Capability uses Actual Data to Identify World-Class Performers in Information Technology Hackett Value Grid™ (IT example) EFFECTIVENESS Member of Executive Committee Reporting relationship Percentage of budget control Planning and strategy resource commitment Business transactions automated Projects meeting requirements Percent SLA being met (internally and externally) Standard adherence Vendor & supplier rationalization Simplification of information access Usage of self-service Degree of turnover Advanced business degrees EFFICIENCY IT cost per end-user Process costs per end user Technology Investments Number of FTEs FTEs per processing groups Spans of control Number of Help Desk Calls Projects meeting budget FTE productivity - Applications Projects delivered on time Help Desk 1st call resolution Number of data centers Number of applications Key Points We use actual data to define world-class performance Two dimensions: Efficiency and Effectiveness Hackett defines world-class as the top quartile performers in both efficiency and effectiveness metrics Where would you place yourself? Where would you place yourself?

The Impact of World-Class Performance on Terms of Cost Savings is Significant…. $6.3 million in savings per $1 billion of revenue / budget $1.7 million in savings per 10,000 employees $1.9 million in cost savings per $1 billion of spend World-class are investing more in IT 51% 9% Median 1,995 5% Median 1.24% Median 0.82% 23% $9,198 WC $8,701 Median WC 1,822 WC 0.63% WC 0.61% Overall Finance cost as a % of revenue /budget Overall HR cost per employee Overall Procurement cost as a % of spend Overall IT cost per end user AND IS THERE A DIFFERENCE IN THE PERFORMANCE OF WORLD CLASS FIRMS VS THE AVERAGE COMPANY – YOU BET THERE IS COSTS RANGE FROM 13 – 45% LOWER AT THESE FIRMS WITH THE EXCEPTION OF IT – WHERE WE FIND WORLD CLASS FIRMS ACTUALLY SPENDING SLIGHTLY MORE AND KEEP IN MIND – THESE ARE WORLD CLASS FIRMS WHICH MEANS THEY DIDN’T GET HERE ON COST ALONE – THEY HAD TO BE PERFORMING AT THE UPPER QUARTILE ON EFFECTIVENESS AS WELL SO WHAT DOES THIS MEAN – WHAT WE SEE IS THAT WC FIRMS ARE SPENDING PRODUCTIVELY IN TECHNOLOGY WHICH IS ENABLING THEM TO DRIVE PERFORMANCE ACROSS THEIR OTHER FUNCTIONS What are your performance improvement opportunities? Hackett 2007 Functional Performance Data - Select SG&A Functions

Enterprise Performance Management (EPM) …..and We Believe that the Effectiveness Opportunity is a Significant Multiple Cost Opportunity Enterprise Performance Management (EPM) Working Capital Talent Management $3,564 2.40 $3,102 Million of EBITDA Receivables $1,329 1.0 Inventory $798 Peer Group World-Class Peer Group World-Class World-class EPM organizations deliver 2.4 times the equity market returns of industry-peer companies Top performing organizations are able to free up $2.9 billion more in working capital than the typical Global 1000 organization A strong correlation of $462 million in additional EBITDA for companies with top-performing talent management programs versus their industry peers

Our Data Shows that Public Sector Can Attain World-Class Performance Levels Finance Cost as a % of Operating Budget Quartile Breakdown as a % of Operating Budget 1.9% Quartile 4 Quartile 3 Cross Functional Peer Public Sector Peer Quartile 2 World-Class Quartile 1 0.3%

Whether Public or Private, World-Class Organizations Have Common Opportunities Control and Risk Management Optimized Cycle Times Integrated transaction system feeding data warehouse to provide full visibility for decision support Information from core transaction system and date warehouse provided via Portal Shared Services Transaction Processing performed in centralized Service Organization Performance efficiency and customer service driven Perform standardized transaction processing Transaction Processing Cost efficient and effective fully leveraging integrated systems for speed and accuracy Processing though out the business cycle Streamlined processes - automated transactions, maintaining data in the core transaction system, touching things once Integrated sub systems Do it right the first time approach Performance Management Linked departmental & operational goals to objectives Develop performance measurement scorecards Financial performance Operational performance Customer satisfaction Measure according to established and shared metrics Reward the behavior you desire Business Intelligence The right data at the right level High degree of automation allows for drill down to sub ledger data Data Warehouse to provide analytics and feed standard reporting

Methodology

Unique Process Taxonomy Spans SG&A 8 functions across 59 process groups Finance Cash disbursements Revenue cycle Accounting and external reporting Tax management Treasury management Compliance Management Planning & Performance Management Business Analysis Function Management Executive and Corporate Services General Administration Mgt Travel & Transportation Services Real Estate & Facilities Mgt Government Affairs Legal Quality Management Risk & Security Management Corporate Communications Planning & Strategy Executive Office Information Technology Infrastructure Management End User Support Infrastructure Development Application Maintenance Application Development & Implementation Quality Assurance Risk Management IT Business Planning Enterprise Architecture Planning Emerging Technologies Function Management Service Order & Contract Management Service Execution Service Operations Planning & Strategy Function Management Marketing Marketing Communication & Program Management Brand & Product Management Planning & Strategy Market Research & Analytics Function Management Human Resources Total Rewards Administration Payroll Services Data Management, Reporting & Compliance Staffing Services Workforce Development Services Organizational Effectiveness Total Rewards Planning Strategic Workforce Planning Function Management Sales Sales Execution Sales Operations Planning & Strategy Function Management Procurement Supply Data Management Requisition & PO Processing Supplier Scheduling Receipt Processing Compliance Management Customer Management Sourcing Execution Supplier Management & Development Function Strategy & Performance Management Sourcing & Supply Base Strategy Function Management Hackett’s taxonomy ensures an apples-to-apples comparison

Hackett’s Process Taxonomy Ensures “Apples-to-Apples” comparisons Process Groups Cash disbursements Processes Accounts payable Travel and expense Sub-Processes Supplier set-up Pre-processing Verification / approval Processing Discrepancy resolution Payments Inquiry response File / store / retrieve Reconciliation/ accrual/compliance Activities Processing and routing of incoming mail specific to cash disbursements process, including handling of invoices, bills of lading & receiving documents and expense reports Matching of supplier invoice, purchase order, receipt acknowledgement and other required documents or information to validate and verify payment can be made to suppliers (More) We then describe each process group further into processes; sub-processes and activities We collect data from organizations by process group, irrespective of who they report to; what you call it or where it is located This level of specificity ensures that we get metrics which are fundamentally similar in which to conduct our statistical analysis Data collected based on work performed, not on reporting structures or functions

Entity (University-wide) Information Technology Purchasing Department Hackett’s Toolset has been Tested in Thousands of Engagements and Facilitates Rapid, Accurate Data Collection Entity (University-wide) Central Departments Finance Human Resources Procurement Information Technology Office of Finance Office of Technology Purchasing Department Provost Office College A College B College C College D Locations can be set up in parent / child structures to allow function and department/college coordinators to see progress of locations for which they are responsible

Overall program features Standardized approach and taxonomy – aligned for public sector Results are based on objective facts and documented in a report to include: Evaluation of efficiency and effectiveness Understanding on use of best practices Quantify opportunities for improvement Comparisons included: Public Sector (after 7 states, counties and/or higher eds complete their data submission for each function – now available in the finance function) The first 7 states will get an updated report that includes the State peer group when available Hackett World-class and peer group organizations An organization may decide to participate in one or more benchmark studies at any time An organization may complete a first benchmark, with contract allowing for another benchmark in 2-3 years

Hackett’s Portfolio

Hackett Solution Portfolio Advisory, Benchmarking and Business Transformation Services Deliverables Benefits Advisory Insight into World-Class Performance Best Practice Research Advisor Access Best Practice Intelligence Center Peer Interaction *World-Class Progress Report (*Executive Advisory only) Identify the strategies and practices employed by Leaders Validation of Current Initiatives Determining What’s Possible (World-Class Performance Metrics) Process Implementation Support Continuous Best Practice Adoption Benchmarking Assess World-Class Performance Peer & World-Class comparison Performance metrics Detailed analysis Stakeholder Survey Executive Presentation Objective comparison to peer group and world-class performers Quantify performance Gaps Uncover hidden costs Prioritization of improvement initiatives Business Transformation Transforms Performance into World-Class Strategic Direction Detailed Business Case Initiative Plans & Detailed Designs Implementation of Best Practices Reduced Cost Working Capital Optimization Enhanced Service Delivery Business Insight Sustainable Benefits Speed of Solution Delivery Risk Mitigation Working Capital Solutions Transforms Performance into World-Class Trained and Motivated Organization Key Metrics to Track Performance A Focus on Continuous Improvement Reduced Working Capital Reduced Costs Increased Flexibility Our services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services. Briefly review high-level deliverables and benefits per service line Through a flexible array of services, we enable executives to address their continuous challenges…making the unpredictable “predictable” What capabilities do you need to address your continuous challenges in today’s environment?

Hackett Advisory Program Portfolio Research-centric membership programs that support continuous improvement initiatives Deliverables Benefits Advisory Insight into World-Class Performance Best Practice Research Advisor Access Best Practice Intelligence Center Peer Interaction *World-Class Progress Report (*Executive Advisory only) Identify the strategies and practices employed by Leaders Validation of Current Initiatives Determining What’s Possible (World-Class Performance Metrics) Process Implementation Support Continuous Best Practice Adoption Executive Advisory Programs Enterprise Finance Human Resources Information Technology Procurement Executive Executive Advisory Programs Finance Operations Purchase-to-Pay Account-to-Report Finance Shared Services Payroll Invoice-to-Cash Key Points Our services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services. Briefly review high level deliverables and benefits per service line Through a flexible array of services, we enable executives to address their continuous challenges…making the unpredictable “predictable.” What capabilities do you need to address your continuous challenges in today’s environment? Why do clients engage us for Advisory services? 22

Hackett Benchmark Solutions Portfolio Performance metrics that assess both efficiency and effectiveness Deliverables Benefits Benchmarking Assess World-Class Performance Peer & World-Class comparison Performance metrics Detailed analysis Stakeholder Survey Executive Presentation Objective comparison to peer group and world-class performers Quantify performance Gaps Uncover hidden costs Prioritization of improvement initiatives Benchmark Programs SG&A G&A Merger & Integration Analysis Benchmark Programs Finance Human Resources Information Technology Procurement Marketing, Sales & Service Key Points Our services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services. Briefly review high level deliverables and benefits per service line Through a flexible array of services, we enable executives to address their continuous challenges…making the unpredictable “predictable.” What capabilities do you need to address your continuous challenges in today’s environment? Are you performing at a world-class level? 23

Hackett Transformation Solutions Portfolio Initiative-based strategy, design and implementation services Deliverables Benefits Business Transformation Transforms Performance into World-Class Strategic Direction Detailed Business Case Initiative Plans & Detailed Designs Implementation of Best Practices Reduced Cost Working Capital Optimization Enhanced Service Delivery Business Insight Sustainable Benefits Speed of Solution Delivery Risk Mitigation Functional Expertise Finance Human Resources Procurement Information Technology Planning & Performance Management Workforce Management Working capital management Featured Solutions Shared Services design and implementation Transaction processing optimization Planning, budgeting and forecasting Business process sourcing IT Strategy Globalization impact analysis Business performance management & reporting Key Points Our services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services. Briefly review high-level deliverables and benefits per service line Through a flexible array of services, we enable executives to address their continuous challenges…making the unpredictable “predictable” What capabilities do you need to address your continuous challenges in today’s environment? Why do clients engage The Hackett Group for transformation scopes of work? 24

For further information please contact Paul Goodwin Hackett Account Director Raleigh, NC pgoodwin@thehackettgroup.com 919-866-1906 Statement of Confidentiality and Usage Restrictions This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group. Copyright © 2008 The Hackett Group, Inc. All rights reserved. World-Class Defined and Enabled.